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Smart Summary

Factual and Procedural Background

This opinion addresses an application filed by defendant no. 1 in Suit No. 47 of 1977 seeking dismissal of the suit or taking it off the file, dismissal of an interlocutory application by the plaintiff, and stay of the suit pending disposal of the application. The plaintiff is a company incorporated under the Companies Act, 1956, and the suit involves 15 defendants. The background involves a joint venture agreement dated 15th March 1974 concerning a Mini Steel Plant in Indonesia, with various resolutions, letters, and licenses exchanged between the plaintiff, defendants, and Indonesian authorities from 1973 to 1977. The plaintiff claims it was wrongfully excluded from participation in the joint venture and challenges the validity of certain board resolutions and share allotments in defendant no. 1 company. The defendant contends that the plaintiff’s alleged business was ultravires and disputes the enforceability of the joint venture agreement and the plaintiff’s claims.

Legal Issues Presented

  1. Whether the plaint discloses any cause of action, particularly regarding the ultravires nature of the joint venture and the plaintiff’s entitlement to participate in it.
  2. Whether the joint venture agreement was enforceable without a special resolution under Section 149 of the Companies Act, 1956.
  3. Whether the plaintiff could be substituted by defendant no. 1 in the joint venture without proper authorization.
  4. Whether the suit is maintainable given the absence of necessary parties such as the Indonesian joint venture company and certain directors.
  5. Whether the plaintiff’s claim violates provisions of the Foreign Exchange Regulation Act, 1973, including the question of license validity and personal nature.
  6. Whether the suit is barred under Sections 38 and 41 of the Specific Relief Act, 1963, for lack of readiness, willingness, or damages claimed.

Arguments of the Parties

Defendant's Arguments

  • The plaintiff company never carried on the business alleged and the joint venture was ultravires the memorandum and articles of association.
  • The plaintiff was not authorized by a special resolution to undertake the joint venture business.
  • The joint venture agreement was unenforceable as the defendant no. 1 was not a party to the original agreement and had not adopted it.
  • The plaint does not disclose any cause of action and the suit is barred by law.
  • The plaintiff is not a member of the Indonesian joint venture company and has not impleaded necessary parties.
  • The plaintiff’s claim is inconsistent and misconceived, particularly regarding substitution and share allotment.
  • The suit is not maintainable under Sections 38 and 41 of the Specific Relief Act for lack of readiness and willingness or damages.
  • The plaintiff’s reliefs against the Indonesian party are outside the jurisdiction of the court.

Plaintiff's Arguments

  • The plaintiff contends it was entitled to participate in the joint venture in Indonesia by providing technical expertise and acting as an expert adviser.
  • The plaintiff claims the defendant no. 1 was substituted improperly in the joint venture, and the plaintiff was wrongfully excluded from control.
  • The plaintiff relies on board resolutions and various communications evidencing its participation and authorization regarding the joint venture.
  • The plaintiff asserts the joint venture agreement was valid and binding, and that the defendants conspired to defeat its rights.
  • The plaintiff disputes the claim that a special resolution was necessary or that the joint venture was ultravires.
  • The plaintiff denies that the suit is barred by the Specific Relief Act provisions and argues readiness and willingness are not prerequisites at this stage.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Union of India v. Chainoy Chablani, 80 C.W.N. 819 Determination of cause of action based on plaint averments Distinguished on facts; in that case no cause of action was found on plaint alone
Moolji Jaitha and Co. v. K.S. and W. Mills Co., AIR 1950 Federal Court 83 Nature and purpose of suit to be determined by reading the plaint as a whole Applied to emphasize that the court must consider the substance of the suit rather than dissect prayers
Ramaraghava Reddy v. Seshu Reddy, AIR 1967 S.C. 436 Interpretation of Specific Relief Act and its non-exhaustive nature Relied upon to reject argument that suit is barred under Specific Relief Act
H.I. Trust v. Haridas Mundhra, AIR 1972 S.C. 1826 Similar view on Specific Relief Act and reliefs Supported the position that Specific Relief Act does not bar suit at this stage
Natal Land and Colonization Co. v. Pauline Colliery Syndicate, 1904 (A.C.) 120 Company cannot adopt contract made before its existence without new contract Referenced in context of whether defendant no. 1 could adopt joint venture agreement
Attorney General v. Manchester Corporation, 1906 (1) Ch. 643 Ancillary business must be ancillary to main business permitted by articles Used to argue limits on business activities under articles of association
London Financial Association v. Celk, 26 Ch. D. 107 Construction of objects clauses and ancillary business Applied to interpret memorandum and articles of association
In re Crown Bank, 44 Ch. D. 634 Interpretation of objects clauses and company powers Referred to in construing the plaintiff’s memorandum
Evans v. Brunner Mond and Co., 1921 (1) Ch. 359 Interpretation of company powers and objects Relied upon for principles of construction of memorandum
Charterbridge Corporation Ltd. v. Lloyds Bank Ltd., 1970 (1) Ch. 62 Interpretation of memorandum and articles of association Referenced for principles of construction
In Re Introduction Ltd., 1970 (1) Ch. 199 Interpretation of company powers and memorandum Used to support reasoning on memorandum construction
Egyptian Salt and Soda Co. v. Port Said Salt Association, AIR 1931 Privy Council 182 Interpretation of memorandum of association according to ordinary principles Relied upon to support fair and reasonable interpretation of memorandum
T.M. and Co. v. H.I. Trust Ltd., AIR 1972 S.C. 1311 Determination of company powers based on facts and memorandum provisions Applied to highlight fact-based approach to company powers
In the matter of Bhutoria Brothers, AIR 1957 Cal. 593 Possibility of factual alteration of memorandum by long conduct Referred to in context of possible ratification or alteration

Court's Reasoning and Analysis

The court examined whether the plaint disclosed any cause of action under Order 7, Rule 11 of the Code of Civil Procedure. It recognized that the plaintiff’s memorandum and articles of association contained sufficiently wide objects to include the joint venture business alleged. The court acknowledged settled principles that a memorandum should be read fairly and plainly and that factual conduct could in certain circumstances alter the memorandum. The court distinguished this case from prior decisions where no cause of action was found on the plaint alone.

The court found that questions of law and fact arose on the enforceability of the joint venture agreement, the necessity of a special resolution under Section 149 of the Companies Act, and the plaintiff’s entitlement to participate. These issues were deemed debatable and not suitable for dismissal at this stage.

The court also considered the defendant’s arguments regarding non-joinder of necessary parties, jurisdictional issues concerning the Indonesian company, and the applicability of the Specific Relief Act. It observed that these matters required further examination and were not grounds for dismissal at the application stage.

Reliance was placed on various precedents to support the principle that the plaint must be read as a whole and that the nature of the suit is determined by its substance rather than the form of prayers. The court declined to express any opinion on the ultimate merits or on disputed facts at this stage.

Regarding the contention that the plaintiff lacked a license or that the license was personal, the court held that the plaintiff was enforcing a contractual bargain rather than a right to a license, and thus dismissal on this ground was not appropriate at this stage.

Holding and Implications

The application filed by defendant no. 1 for dismissal of the suit and other reliefs is dismissed.

The court refused the stay sought by the defendant and ordered that the costs of the application be costs in the suit. The dismissal of the application does not preclude the possibility that the plaintiff may ultimately be non-suited on some grounds at the trial. No new precedent was established; the decision primarily allows the suit to proceed to a full hearing on the merits.

    Andhra Steel Corporation v. A.S.C. Engineers And Consultants

    SABYASACHI MUKHARJI. J.

    (1.) This is an application on behalf of the defendant no. 1 in this suit praying that this suit being suit No. 47 of 1977 be taken off the file, or the Suit No. 47 of 1977 be dismissed and also praying that the interlocutory application made by the plaintiff on or about 28th January, 1977 be dismissed, and for further stay of the suit till the disposal of the present application and other incidental orders. In order to appreciate this application it may not be inappropriate to refer to certain facts. The plaintiff in this case is a company incorporated under the provisions of the Companies Act, 1956 and there are in all 15 defendants. It appears that on 8th of January, 1977 there was resolution passed by the Board of Directors of the plaintiff company giving authority to one Sri M. I. Mittal to make application on behalf of every body to all concerned. By the resolution it was resolved that one Sri M. L. Mittal and Sri Damodarlal singly or jointly be authorised to carry out all negotiations, make representations sign papers, application forms and other necessary documents to all relevant Government and Semi-Government bodies, institutions, banks etc. and to do all such acts or things as may be necessary in connection with the proposed-Mini Steel Plant in Indonesia. It was further resolved that Sri Mittal and Sri Damodarlal singly or jointly be authorised to delegate the above mentioned powers if found necessary to such persons as they may deem fit and proper. On or about 27th of February, 1979 Sri Mittal wrote on behalf of the plaintiff company to the Indonesian Government enclosing what has been described as Form 'A' application. In April, 1973 Form 'A' application was submitted in plaintiffs name to the Indonesian Government. A letter was written by the plaintiff on or about 24th of April, 1973 to the Indonesian, Government which has been pleaded in paragraph 12 of the plaint. On 22nd of February, 1974 letter was written by the plaintiff's banker recommending plaintiff's financial condition to the Indonesian Government. On the 5th of March, 1974 there was a letter from Bank of India Singapore to Sri M. L. Mittal stating the terms and conditions of financial assistance of the joint venture. The said terms and conditions have been set out in Annexure 'F' to the plaint. On the 15th of March, 1974 the Joint Venture Agreement was-signed. The said agreement appears as an annexure to the plaint. On the 25th of March, 1974 Sri M. L. Mittal sent a note to the plaintiff at Calcutta about feasibility and advantage of Joint Venture Programmed. On the 24th of May, 1974 Annual General Meeting of the plaintiff company for the financial year up to 21st of October, 1973 was held and on 16th of April, 1975 the plaintiff received licence from Indonesian Government to make investments. On the 15th of June. ,1975 there was a resolution by the Board of Directors agreeing, interalia, to substitute A. S. C. Engineers and Consultants Ltd. the defendant no. 1, in the present suit in place of the plaintiff in the said Joint Venture Programmed. Mohonlal Mittal is the defendant no. 2 and Vijay Sankar Modi is the defendant no. 7. On 2nd of July, 1975 there was a letter by the defendant no, 7 evidencing that the plaintiff's Board Resolution dated 15th of June, 1975, was acted upon. At least that is the version of the present petitioner before me. The said fact is relied on from an annexure to the plaint. On the 17th of July, 1975the dependent No. 1 was formed. 21st of July, 1975 plaintiff's application to the Central Government for substitution of the defendant no. 1 for the plaintiff for approval under Section 27(6) of the Foreign Exchange Regulation Act, 1973 was made. On the 27th of October, 1975 there was a change in the preliminary licence decree of Indonesian Government dated 15th of April, 1975 substituting the name of the defendant no. 1 in place of the plaintiff. On the 17th of November, 1975 the foreign company of the joint venture was incorporated. On 28th of, November, 1975 letter was written by the defendant no. 1 to the Central Government enclosing amendment of the Indonesian Ministerial Decree substituting the name of the defendant no. 1 as participant. On 22nd of November, 1976 there was an allotment of 40,000 equity Shares to the defendant no. 7 (sic) namely, Giovanola Binny Ltd. in the defendant nq. 1. On the 28th of January, 1977 the present suit was filed.

    (2.) In this suit the plaintiff has, interalia, asked for a declaration that the resolution purported to have been passed at the purported board meeting of the defendant no. 1 company alleged to have been held in November, 1976 are ula'travires, void and of no effect and not binding on the plaintiff or its shareholders, declaration that the defendant no. 2 is no longer the constituted attorney of the plaintiff company declaration that the purported issue and/or allotment of 40000 shares of or in the capital of the defendant no. 1 in favour of the defendant no. 7 is malafide, illegal, void and of no effect and not binding on the plaintiff or its shareholders, perpetual injunction restraining the defendants and each one of them, their advocates and agents from giving effect or any further effect or acting on the basis of the purported resolution alleged to have been passed at the purported board meeting of the plaintiff company alleged to have been held on the 22nd of November, 1976, for a perpetual injunction restraining the defendant no. 2 from holding himself out or representing himself as the constituted attorney of the plaintiff company or acting upon or on the basis of the said power of attorney, perpetual injection restraining the defendants nos. 1 to 5 and 7 to 15 and each of them, their servants and agents from in any way acting contrary to the terms and conditions of the said Joint Venture Agreement mentioned in the plaint, for a decree directing cancellation and delivery of all documents and executed contrary to Joint Venture Agreement, for a perpetual injunction restraining the defendants and each of them their servants and agents from giving effect or any further effect or resolution whereby and where under the said 40000 shares were alleged to have been allotted to the defendant no. 7 and in the alternative an injunction restraining the defendants and each one of them, their servants and agents from issuing and or allotting the said 40000 shares or any further share to the said defendant no. 7 or any person or at all, for a mandatory injunction against defendant nos. 1 to 5 and 7 to 15 directing them to rectify the letter of change and foreign collaboration project mentioned in paragraph 59 of the plaint and all consequential orders to be made in connection therewith, mandatory injunction against defendants nos. 1 to 5 and 7 to 15 to take all steps for alteration of the Articles of Association of P. T. Andhra Steel Indonesia mentioned in paragraph 61 of the plaint, for a decree for accounts against defendant nos. 1 to 5 and 7 to 15 as mentioned in paragraph 56 of the plaint and for other consequential orders for appointment of receiver and/or administrator etc. In February, 1979 the present application was made by the defendant no. 1 under Order VII, Rule 7 of the Code of Civil Procedure on the ground that the plaint does not disclose any cause of action. and also because the suit as appearing from the plaint is barred by law.

    (3.) I have set out the basis of the suit by the present plaintiff. The plaintiff is really contending that it is entitled to participate in the joint venture in Indonesia being implemented by a Indonesian company by the name P. T. Andhra Steel Indonesia by rendering service of its technicians and by acting as expert adviser in the said joint venture. According to the defendant the name of the said P. T. Andhra Steel has since been changed to P. T. In do Is pat. The defendant contends that the plaintiff company never carried on such business and therefore the same would be ultravires. the memorandum of its article of association. Furthermore according to the defendant such proposed business of the plaintiff company would be altogether a new business not being carried on by the plaintiff company at the date of the institution of the suit or at all material times prior thereto and as such the plaintiff company was not entitled at the date of the institution of the suit to undertake such business without the sanction of its members by a special resolution. The defendant further asserts that no such special resolution authorizing it to undertake such a proposed business had been passed by the plaintiff company. Therefore, according to the defendant the statutory condition precedent to the plaintiff's carrying on of the said proposed business was not at all satisfied. It is the further case of the defendant that the case of the plaintiff that it has been substituted by the first defendant in the joint venture in Indonesia and collaboration was inconsistent on the basis of the plaintiff's own statement as contained in the plaint as to the reasons and circumstances in which the first defendant came to be incorporated. The defendant, further, states the said purported complaint is untrue and misconceived. The defendant asserts that the plaintiff is not even a member of the said P. T. Andhra Streel Indonesia the foreign company formed as a, result of the said joint venture agreement. According to the defendant the real complaint of the plaintiff as appearing from the plaint appears to be the alleged default on the part of the said P.T. Andhra Steel Indonesia in allotting any share to the plaintiff company. The defendant states that there is however, no evidence of any application having been made by the plaintiff before the said Indonesian concern for allotment of any of its shares to the plaintiff or any refusal. The defendant asserts that the plaintiff has not prayed in the present suit for any relief in this matter and has not impleaded the Indonesian Company which is a necessary party. The defendant, further, asserts that the plaintiff has not disclosed in the body of the plaint with whom the alleged joint venture agreement dated 15th Of March, 1974 was entered into and there is no evidence that the said P. T. Andhra Steel, Indonesia was formed as a result of such alleged agreement, or in fact had adopted the said agreement or any of the transaction that took place pursuant to the said agreement and prior to the formation of the said concern or has entered into the agreement with the plaintiff containing the terms and conditions or has showed any readiness or willingness to abide by the terms and conditions of such agreement. Therefore according to the defendant the said alleged joint venture agreement was not enforceable. The defendant has, further, asserted that the present suit had not been instituted in the representative capacity and no leave under the provisions of Order I, Rule 8 of the Code of Civil Procedure has been sought for or obtained. All necessary persons who are members of the first defendant at the date of the Institution of the present suit have not been impleaded as parties in the suit namely, B. C. Mittal and M. L. Agarwal, according to the defendant. Further, all persons who are directors of the first defendant and of the plaintiff company at the relevant time as indicated have not been impleaded as they should have been. According to the plaintiff, a board resolution by the plaintiff company was passed on the 16th of June, 1975 resolving to place the first defendant in place and stead of the plaintiff company. The defendant, further, asserts that the plaintiff not being a member of P. T. Indo Ispat cannot have any right or say in the management of the affairs of the company which company is working out the collaboration agreement in which the plaintiff is wrongfully and illegally attempting to participate. In the premises in substance the defendant states that the plaint as pleaded does not disclose any cause of action.

    (4.) In order to appreciate the case of the defendant it will be proper to remember that after setting out the document of the plaintiff's petition the plaintiff has alleged that on or about 8th of January, 1973 the plaintiff had decided to take up the joint venture programmed to increase the profitability of the company and at the plaintiff's 15th Annual General Meeting held on 24th of May, 1974 had revealed to the shareholders the summary of the plaintiffs future prospects. In this connection the annual report of the company has been referred to and the directors of the plaintiff at that meeting had envisaged the participation of the new company in Indonesia and for that purpose to provide the technical know-how and engineering consultancy and one Sri H. M. Mahtani of Indonesia had negotiated such joint venture and that one Mohonlal Mittal for and on behalf of the plaintiff company had written to the Minister of Industries, Republic of Indonesia informing him of the plaintiff's proposal to set up a Mini Steel Plant in Indonesia in technical collaboration with foreign collaborators and subsequent thereto after various steps on or about 15th of March, 1974 a joint venture agreement was prepared and the terms and conditions of the said joint venture programmed according to the plaintiff have been set out in the plaint and it is further the case the plaintiff that in pursuance of the same P. T. Andhra Steel Indonesia with paid up share capital of a large amount of money was formed and the plaintiff was to have certain numbers of directors and the plaintiff had subsequently applied to and by a decree dated 15th of April, 1975 the Ministry of Basic Industries, Indonesia duly accorded a licence to the plaintiff for such investment on the terms and conditions as mentioned therein and the plaintiff's banker, the Bank of India had provided certain information about the financial resources of the plaintiff company upon the basis of which such sanction was granted. Therefore, in the joint collaboration agreement it was the plaintiff's credit, the plaintiff's initiative, according to the plaintiff that had contributed materially. It has been, further, alleged that on the 16th of June, 1975 the Board of Directors of the plaintiff company had passed a resolution unanimously that such a company be formed to canalize the profit earned from foreign technical know-how termed as "Foreign Technical Fees" and accordingly A. S. C. Engineers and Consultants Ltd. was floated in Calcutta. Therefore, the defendant company being the defendant no. 1 was the subsidiary of the plaintiff company. But according to the plaintiff on or about 3rd of June, 1976 at a meeting of the Board of Directors of the plaintiff held at Bangalore it transpired for the first time that the defendant no. 2 Mohan Lal Mittal in collusion and conspiracy with one Sri Mohonlal Lohia had applied to Government of India under Section 27 (6) of the Foreign Exchange Regulation Act, 1973 and had submitted which the plaintiff describes as a purported revised proposal in proposing the name of the defendant company to be substituted in place of the plaintiff company and had purported to represent to the said Government authorities that the promoter to the joint venture was the defendant no. 1 and not the plaintiff. It is only on that basis that the plaintiff has basically based its claim and asked for all consequential relief s in this plaint. The plaintiff complains that the plaintiff had been eliminated from the control of the defendant no. 1 company by purporting to allot 40,000 equity Shares in the defendant company to Giovanola Binny Ltd.

    (5.) Now, as I have mentioned before the main question posed in this application is that the joint venture the elimination from which the plaintiff is complaining in this suit was ultravires the memorandum of association of the plaintiff company. Now in this connection reference may be made to the objects clause of the plaintiff company and it is not necessary to set out in detail all the objects. But sub-clause(2) of clause 3 of the objects read with Clauses 36,48 and other sub-clauses, in my opinion it can be construed that the objects were sufficiently wide to include starting of a joint venture company in a foreign country or set up of a joint venture company in a foreign country for canalization of the profits arising out of the technical know-how acquired by the plaintiff company in the process of its long experience and for sharing such profits with a foreign company. It is true that the principles upon which the memorandum and articles of association of a company should be construed are well settled and the principles upon which learned advocate for the defendant company relied are also well settled and cannot be disputed. But it is wall to remember as reiterated for the Privy Council in the decision and of the Supreme Court which I -shall presently notice, that the memorandum should be read fairly and plainly like any other document or deed and then it should be found out whether the objects contemplated were included in the memorandum. It has also to be reiterated in the case of In the Matter of Bhutoria Brothers AIR , 1957, Calcutta 593, by the Calcutta High Court that if a company had carried on a business for long factual alteration of memorandum subsequently could in certain circumstances be permitted. It is true in this connection reliance was placed on Section 149 of the Companies Act, 1.956 to highlight the proposition that subsequent alteration or subsequent ratification of the alteration of memorandum would not make the entering into the agreement for joint venture a valid one but it must be emphasized that I am concerned in this application with the question whether the suit is liable to be dismissed under Order 7, Rule 11 either under clause (a) or clause (d) of the said rule of the Coda of Civil Procedure. Learned advocate for the defendant stressed before me that there is a significant difference between the requirement of Order 7, Rule 11 and the requirement of Order 14 Rule 2(b) of the Code of Civil Procedure. That Is true. But a suit or a plaint might raise a controversy or a question either about certain facts or about certain proposition of law. If either on admitted facts or undisputed facts a conclusion irresistibly follows either as a matter of law or as a conclusion of fact and on that conclusion it could be said without further argument that the plaint does not disclose any cause of action or the Court has no jurisdiction to try the suit, then and then only, in my opinion, the provisions of Order 7, Rule 11 could be attracted. But even if in a case where on undisputed facts a question of law arises on which there may be a controversy on an interpretation of law, on which two views might be canvassed, in my opinion. Order 7, Rule 11 could not be attracted because the suit might as is well known raise both questions of law as well as questions of facts. Therefore in this case whether on the proper construction of the articles and the memorandum of association of the plaintiff company a joint venture the type of which the plaintiff is complaining in the plaint in the instant suit was possible or legal, is a matter on which two views might be possible. Similarly, whether in this case in view of sub-section 2A of Section 149 of the Companies Act subsequent ratification could not be made of the agreement for joint venture is a matter on which exfacie on the averments made in the plaint as a matter of only conclusion it cannot be said that the plaint does not disclose any cause of action. Whether it is ultimately sp held or can be so held is a matter upon which the Court, in my opinion should not at this stage pronounce a view and I should not be construed as expressing any views on this point. All I need say that this is not a case on this ground to hold that the plaint as such does not disclose any cause of action. It may be that the plaintiff will have a very difficult task in establishing the proposition that the plaintiff's joint venture exclusion from Which the plaintiff is complaining was legal.

    (6.) The decision in the case of Union of India v. Chainoy Chablani 80 C. W.N. page 819 was given on an entirely different set of facts because there I had found that on the basis of the averments made in the plaint itself there was no cause of action as such.

    (7.) The next ground in this case was that the joint venture agreement was not enforceable because no special resolution as contemplated by Section 149 of the Companies, Act, 1956 . had been passed. Whether in a situation of this nature such a subsequent resolution could have been passed or whether on a construction of the memorandum of association of the plaintiff company it did not require such a special resolution for the type of venture contemplated in the plaint, is a matter, on which arguments are possible. Therefore the question whether subsequently such a joint venture was permissible Or not is a matter on which it is not necessary at this stage to decide. It was, then, contended as mentioned before that the complaint of the replacement of the defendant no. 1 as the promoter of the joint venture was inconsistent and untrue with the other averments made in the plaint. Whether that is so or not is again, in my opinion, a matter which is not relevant to be decided at this stage. This requires an examination of the construction of the plaint and it cannot be said that on the construction of the plaint as a matter of course the alleged replacement of the defendant no. 1 as the promoter to the joint venture was inconsistent and unbelievable. It was then, urged that the suit was not maintainable because relief s had been claimed against the Indonesian party which was not within the jurisdiction of this court and, secondly, the Indonesian company had not been made a party. It was further, urged that the plaintiff not being a member of the joint venture company was not entitled to any relief against the foreign company. It was, further, urged that the directors of the defendant no. 1 company were necessary parties and they had not been made parties to the suit. It was submitted that the defendant no. 1 was not a party to the original collaboration agreement alleged by the plaintiff and after its incorporation it had not adopted the said alleged agreement. Therefore the said alleged agreement could not be made enforceable against the said company. My attention was drawn to the Specific Relief Act, 1963 and it was urged that under Section 41, Clause (e) as well as Section 38 of the Specific Relief Act, 1963 the suit was not maintainable. Now, in this connection it may not be inappropriate to refer to the observations of the Federal Court in the case of Moolji Jaitha andCo. vs. K. S. and W. Mills Co. AIR 1950, Federal Court page 83 where Chief Justice Kania held that the nature of the suit and its purpose have to be determined by reading the plaint as a whole. It was not proper to dissect the prayers and consider whether the Court had jurisdiction to a limited point. The inclusion or absence of a prayer was not decisive of the true nature of the suit nor was the order in which the prayers were arrayed in the plaint. The substance or the object of the suit had to be gathered from the averments made in the plaint on which the relief s asked in the prayers were based, The Supreme Court in the case of Ramaraghava Reddy v. Seshu Reddy AIR 1967 S.C. page 436 had held that Specific Relief Act was not exhaustive. In this connection reliance may be placed on the observations of the Court appearing a pages 438 to 439 of the report. Similar view was more or less expressed by the Supreme Court in the case of H. I. Trust vs. Haridas Mundhra AIR 1972 S. C. .1826. For the reasons mentioned above in my opinion it cannot be said at this stage that the plaint is liable to be dismissed under Order 7, Rule 11 either under clause (1) or clause (d). whether the plaintiff had technical know-how by operating its existing business and whether sharing of the profits of the said technical know-how in the manner alleged by the plaintiff in the plaint would be really Carrying on or starting a new business or not is a matter of debate. Therefore, it is not necessary in my opinion to deride at this stage whether the plaintiff had technical know-how or not. It is also not necessary in my opinion to decide whether the defendant, no. 1 was not being a party to the joint venture agreement alleged by the plaintiff could be bound by the alleged agreement for joint venture. Now the allegation of the plaintiff in its proper perspective is that the defendant no. 1 Was conceived in breach of the joint venture agreement and in derogation of the rights of the parties With the conspiracy of other defendants named in the plaint. Whether on a item as a result of conspiracy in breach of a solemn agreement could continue in the eye of law is a matter on which at this stage it is not necessary or desirable in my opinion to express any view. If that is the position then whether the Indonesian party not being made a party to the suit and not being within the jurisdiction of this Court would not, in my opinion, equally be decisive of the question as to whether the plaintiff can obtain any relief in the suit at all. Similarly, whether the directors of the defendant no. 1 were also necessary parties need not, in my opinion be decided at this stage. In aid of the submission that at the date of the collaboration agreement there was no authority for the plaintiff to participate into such a kind of venture, my attention was drawn to the observations of the House of Lords in the case of Natal Land and! Colonization Co. vs. Pauline Colliery Syndicate 1904 (A. C.) page 120 where it was held that a company cannot by adoption or ratification obtain the benefit of a contract purported to have been made on this behalf before the company came into existence. In order to do so a new contract must be made with it after its incorporation. In this connection reliance was placed on the observation, of Lord Dave at page 126 of the report. In aid of the similar proposition reliance was placed on the observations made in Palmer'sCompany Law, 22nd Ed., Article 9/26 pages 99 to 100. Reliance was also placed on the decision reported in Law Reports, 7 House of Lords page 754. Learned advocate for the applicant before me also drew my attention to the decision in the case Attorney General vs. Manchester Corporation 1906 (1) Ch. page 643 In aid of the submission that ancillary business permitted by the Article of Association must be read as meaning ancillary to the main business permitted or otherwise by the article of association and not any business independent or separate of the main business. It was submitted that if a memorandum containing general objects was there, then, the subsequent objects should be construed with reference to immediately proceeding object clause and for this reliance was placed on the observations of the Ch. Division in the case of London Financial Association vs. Celk 26 Ch. Division page 107 and my attention was drawn to the observations of Vice Chancellor Bacon at page 135 and at page 138 of the report. Similarly, reliance was placed on the observations in the case of In re Crown Bank 44 Ch. Division page 634 at page 643 of the report. Learned advocate relied on the decision reported in 1978 Times Law Report 1937 and the observations in the case of Evans vs. Brunner Mond and Co. 1921 (1) Ch. page 359, For the same purpose learned advocate relied on the observations in the decision in Charter Bridge Corporation Ltd. vs. Lloyds Bank Ltd. 1970 (1) Ch. page 62 and on the decision in the Court of Appeal in the case of In Re Introduction Ltd. 1970 (1) Ch. page 199 and reliance was placed on the observation of Lord Justice Harman at page 209. On the other hand on behalf of the plaintiff reliance was placed on the decision of the Privy Council in the case of Egyptian Salt and Soda Co. vs. Port Said Salt Association AIR 1931 Privy Council page 182 where the Privy Council reiterated that the. memorandum of association of a limited company should be construed in accordance with the accepted principles applicable to the interpretation of all legal documents and it is incorrect to say ,that a specially rigid canon of construction was to be applied to such a document. A memorandum of association like any other document should be read fairly and its import derived from a reasonable interpretation of the language which it employed. It was further reiterated that powers were not required to be and ought not to be specified in the memorandum. A trading company should by its memorandum define the trade but it is not necessary to specify various acts which it should do within the powers of the company to do in carrying on the trade, For the same purpose reliance was placed on the observations of the Supreme Court in the case of T. M. and Co. v, H. i. Trust Ltd. AIR 1972 S.C. page 1311 where at; page 1321 the Supreme Court reiterated that the question whether the company had exceeded the power conferred it would depend on the basis of the facts established and the provisions in its memorandum and not on the basis of any abstract rule. Reliance was placed on the decision in the case of In the matter of Bhutoria Brothers AIR 1957 Cal. page 593. For the reasons I have already indicated it is not necessary, nor desirable to express any opinion on this question, nor to decide this controversy.

    (8.) It was urged that the plaintiff did not have any licence for carrying on such alleged type of business and the joint venture agreement alleged by the plaintiff or the enforcement of the same would be in violation of Section 27 (1) and Section 19A and (a) of the Foreign Exchange Regulation Act, 1973, It was urged that licence was personal. Reliance in this connection was placed on the observations appearing in Stroud's Judicial Dictionary 4th Edition, Volume 3, page 1535 as also on Corpus Juris, Volume 53, article 42. In my opinion the plaintiff is not enforcing any right to a licence but the plaintiff was enforcing a bargain between the parties where under the foreign collaboration company as the subsidiary to the plaintiff would be set up and all ancillary and necessary steps would be taken for that purpose and in breach of the same conspiracy and collusion with some other parties some of the defendants have committed a breach of trust or conspired to defeat the claim of the plaintiff. Whether the plaintiff will succeed or not, or whether the plaintiff's case is true or not is not the question at the stage. If that is the position then in my opinion this proposition that licence is personal and there being no such licence as such in favour of the plaintiff would not be decisive of the matter and at this stage in respect of all the relief s claimed the question of violation of Foreign Exchange Act or any provision there to might or might not arise. In my opinion, it would not be proper to dismiss the suit on this ground.

    (9.) In this connection of the licence reliance was placed on behalf of the defendant on the letter dated 28th of November, 1975 written to the Under Secretary, Government of India what would be the effect of the same it is not necessary at this stage to determine.

    (10.) On behalf of the defendant no. 2 apart from the ground of the no maintainability of the suit under Section 41 and Section 38 of the Specific Relief Act it was contended that the plaintiff had not alleged readiness and willingness nor has the plaintiff alleged and claimed any damages. The suit was therefore liable to be dismissed. For the reasons which I have already indicated before it is not necessary to decide at this stage this controversy.

    (11.) For the reasons mentioned this application fails and is accordingly dismissed. But that does not mean that at the ultimate hearing of the suit oft some of the grounds urged hence the plaintiff might not be non-suited on those grounds. The costs of this appellation will be costs in the suit. Stay, as asked for, is refused. Application rejected. Costs to be costs in the suit. Civil Appellate Jurisdiction

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    Andhra Steel Corporation v. A.S.C. Engineers And Consultants
    (Jun 27, 1980)