1996 (5) TMI 330 - HC - Companies Law

Summary

Issues Involved:

1. Jurisdiction of the Company Law Board (CLB) under Section 634A of the Companies Act, 1956.
2. Whether the CLB can extend the time for implementation of a compromise order.
3. Whether the CLB can direct the payment of interest on delayed payments.

Detailed Analysis:

1. Jurisdiction of the Company Law Board (CLB) under Section 634A of the Companies Act, 1956:

The appellant challenged the order of the CLB dated 19-12-1995, passed under section 634A of the Companies Act, 1956. The appellant contended that the power under section 634A is in the nature of execution proceedings, and the CLB cannot go into the merits of the decree but is empowered to execute it as it stands. The appellant argued that the CLB exceeded its jurisdiction by directing the payment of Rs. 12 lakhs with interest. The respondents countered that the appellant failed to incorporate obligations and duties to be performed by him and that the CLB has inherent powers under rule 44 of the Company Law Board Regulations, 1991. The court noted that the CLB found that the modalities were not prescribed and concluded that time was not the essence of the compromise.

2. Whether the CLB can extend the time for implementation of a compromise order:

The court examined whether the CLB could extend the time for implementing the order passed on 31-10-1994. The court referred to various precedents, including Hukumchand v. Bansilal, Resham Singh v. Manmohan Singh Kent, and Jaynal Haldar v. Khorsed Sheikh, which established that the executing court cannot modify a decree. However, the court also considered the case of Smt. Periyakkal v. Smt. Dakhyani, where it was observed that if the contract between the parties has merged in the court's order, the court's freedom to act to further the ends of justice would not stand curtailed. The court concluded that the CLB, while exercising the powers of the executing court, found that the time was not the essence of the compromise and compensated the appellant with interest for the delay caused.

3. Whether the CLB can direct the payment of interest on delayed payments:

The CLB directed that the amount of Rs. 12 lakhs shall be paid along with interest at the rate of 18 percent till the date of actual remittance, which shall be deposited in an Escrow account with the State Bank of Bikaner and Jaipur. The court noted that the CLB held that the respondents (appellant) are only entitled to the price and for any delayed payment of the price, they may claim interest. The court referred to the case of Ramankutty Guptan v. Avara, where it was observed that the court retains control over the decree even after it has been passed and can exercise the power under section 28(1) of the Specific Relief Act either for extension of time or for rescinding the contract. The court concluded that the CLB had the jurisdiction to pass the decree and extend the time for execution, and the application made by the defendant could be considered an application for extension of time in the decree itself.

Conclusion:

The court found that the CLB did not exceed its jurisdiction in extending the time for implementing the compromise order and directing the payment of interest on delayed payments. The court held that it would not be proper to interfere with the discretion exercised by the CLB and dismissed the appeal.