1993 (12) TMI 199 - HC - Companies Law

Summary

Issues Involved:
1. Whether the learned single judge should have entertained the appeal u/s 10F of the Companies Act?
2. Whether the question of maintainability should have been decided as a preliminary issue?
3. Whether the order under appeal requires interference?

Summary:

Issue 1: Appeal u/s 10F of the Companies Act
The appellants contended that an appeal against the Company Law Board's order u/s 10F of the Companies Act would lie only on a question of law. The maintainability of the petition involves mixed questions of law and fact, thus not a pure question of law. The court held that the Company Law Board did not commit any error of law in deciding that the maintainability issue should be decided along with other issues. Therefore, no question of law was involved for entertaining the appeal u/s 10F of the Act.

Issue 2: Preliminary Issue of Maintainability
The court discussed that the maintainability of the petition involves mixed questions of law and fact. It cannot be strictly laid down that such issues cannot be tried as preliminary issues. In cases involving extensive pleadings and multiple issues, it is just and proper to decide the maintainability issue as a preliminary issue to avoid unnecessary trial. The court upheld the learned single judge's direction to try the maintainability issue as a preliminary issue, noting that the Company Law Board had already scheduled hearings for this purpose.

Issue 3: Interference with Interim Applications
The court disagreed with the learned single judge's direction that no interim applications should be entertained until the maintainability issue is decided. It emphasized that the Company Law Board has jurisdiction to entertain interim applications to preserve the subject matter of the proceedings. The court set aside the part of the order restraining the Company Law Board from considering interim applications, allowing the Board to entertain and decide such applications as necessary.

Conclusion:
The appeal was allowed in part. The order restraining the Company Law Board from entertaining interim applications was set aside, while the direction to decide the maintainability issue as a preliminary issue was upheld. The Company Law Board was directed to decide the maintainability issue by the end of March 1994. No order as to costs was made.