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2016 (8) TMI 826 - HC - Companies LawBreach of principles of natural justice - non-observance of Principles of Natural Justice - whether CLB did not give any opportunity to make submissions to the appellant on the main company petition? - Held that - Not only the contention raised by the learned counsel for the appellant is without there being any factual foundation but the same is not genuine because if the appellant consciously did not make any submission in the main company petition when main company petition as well as company application were heard simultaneously, no complaint can be made at the later stage that there is breach of Principles of Natural Justice. Apart from the above, in a matter of complaint of breach of principles of natural justice, it is by now well settled that unless the breach is satisfactorily demonstrated before the Court, the Court may decline to entertain such complaint. As per the observations made by us hereinabove, when we have found that considering the facts and circumstances, the exercise of the discretion by the CLB cannot be said to be unreasonable or perverse or by committing ex facie error on the face of the record, no useful purpose would be served in entertaining the complaint for breach of principles of natural justice though otherwise such a complaint is not genuine and not supported by any statement of fact in the memorandum of appeal nor any ground raised for such purpose save and except the oral submissions made by the learned counsel for the appellant during the course of hearing. Hence, we find that contention raised by the learned counsel for the appellant cannot be accepted. There is considerable force in the contention raised by the learned counsel for the appellant that respondent no. 2 by virtue of Section 15(2) of the University Act, is entitled to the office as Chancellor for his lifetime but, even by interim order dated 26.4.2016, this Court has not prohibited him from functioning as the Chancellor but what has been directed was that, any hindrance or interference in the administration of the University should not be created. Therefore, lawful exercise of the power as per the University Act by the Chancellor was not prohibited but, any hindrance or interference in the administration of the University which otherwise not permissible in law was prohibited in order to see that the educational activity of the University may not suffer. The question may remain as to whether CLB ought to have passed any interim order pending the conclusion of the proceedings before Civil Court or until the appellant approaches before the Civil Court. We would have addressed such question but it appears to us that since no motion was made in the proceedings in the Company Petition before the CLB, we need not express any view. In any case, proceedings of main Company Petition are still pending before CLB, if any contingency arises in law, CLB is not precluded from passing the interim order save and except on the point for which it has found that the appropriate adjudication should be made before Civil Court. As such, until the party approaches before the Civil Court, appropriate interim order could have been considered by CLB but, in our view, when no motion was made before CLB, all such aspects shall be a mere academic exercise but, suffice it to observe that as and when such contingency arises in law, the parties may move before CLB or may be before Civil Court as the case may be and at that stage, rights and contentions of both the sides would remain open. We do not find that the decision of CLB is against any law or is based on any irrelevant material or omission to consider the relevant material. Thus the appeal fails
Issues Involved:
1. Maintainability of the Company Petition. 2. Jurisdiction of the Company Law Board (CLB) under Sections 58 and 59 of the Companies Act, 2013. 3. Examination of the genuineness of documents and signatures. 4. Relegation to Civil Court for adjudication. 5. Interim relief and deposit of ?47,50,000/-. 6. Impact on the functioning of Alliance University. Detailed Analysis: 1. Maintainability of the Company Petition: The appeal was directed against the order of the CLB, which found the petition maintainable but directed the petitioner to approach the competent Civil Court for resolving the controversial issue before approaching the CLB for the main Company Petition. The CLB disposed of Company Application No. 1/2015, denying the appellant's request to forward the papers to a forensic expert and other reliefs. 2. Jurisdiction of the Company Law Board (CLB) under Sections 58 and 59 of the Companies Act, 2013: The appellant argued that the CLB had the power to decide the principal question of transfer of shares and all incidental aspects, including the genuineness of signatures and validity of the transfer. The appellant contended that the CLB abdicated its duty by relegating the matter to the Civil Court. The respondents argued that the CLB's jurisdiction is summary, and it cannot undertake a full-fledged trial to examine the genuineness of documents, which is better suited for the Civil Court. 3. Examination of the genuineness of documents and signatures: The appellant sought forensic examination of signatures on the transfer documents, claiming the signatures were genuine. Respondents Nos. 2 and 3 filed a criminal complaint alleging forgery, and a handwriting expert's report before the Police Authority supported their claim. The CLB found that the documents were fabricated and signatures forged, leading to the filing of a charge-sheet. Consequently, the CLB directed the appellant to establish the genuineness of the documents in the Civil Court. 4. Relegation to Civil Court for adjudication: The CLB's decision to relegate the appellant to the Civil Court was based on the finding that it lacked the jurisdiction to examine the title and genuineness of the documents under Sections 58 and 59 of the Companies Act, 2013. The Court upheld this decision, noting that the power to examine the title was expressly omitted in the 2013 Act, which was available under Section 111 of the Companies Act, 1956. The Court emphasized that the Civil Court is the appropriate forum for such detailed examination and declaration. 5. Interim relief and deposit of ?47,50,000/-: Pending the appeal, the Court directed respondents Nos. 1 to 3 to deposit ?47,50,000/- with the Court to balance the rights of both parties. The amount was deposited, and the Court ordered that the interim relief would remain in effect until the appellant approached the Civil Court. The Court clarified that the deposited amount should be returned to respondents Nos. 2 and 3 upon filing an undertaking to redeposit it if directed by the CLB or any other competent forum. 6. Impact on the functioning of Alliance University: The Court addressed concerns about the potential impact of the dispute on the functioning of Alliance University. It was clarified that the inter se dispute between the parties should not hinder the administration or educational activities of the University. The Court emphasized the need to protect the interests of the students and staff, ensuring that the University's operations remain unaffected by the ongoing litigation. Conclusion: The appeal was dismissed, and the Court upheld the CLB's decision to relegate the appellant to the Civil Court for establishing the genuineness of the documents. The Court found no error or perverse exercise of discretion by the CLB. The interim relief was vacated, and the deposited amount was ordered to be returned with the condition of redeposit if directed by the competent forum. The Court ensured that the functioning of Alliance University would not be adversely affected by the dispute.
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