1999 (2) TMI 462 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the application for recall of the order dated 18-2-1998.
2. Appealability of the impugned order.
3. Whether any question of law had been raised under section 10F.
4. Whether the discretion of the CLB warranted interference particularly in view of the order of the Supreme Court dated 20-10-1993.

Issue-wise Detailed Analysis:

1. Maintainability of the application for recall of the order dated 18-2-1998:
The appellants submitted that their application for recall was maintainable under the CLB's inherent powers under Regulation 44 of the Company Law Board Regulations, 1991. Regulation 44 allows the CLB to make such orders as necessary for the ends of justice or to prevent abuse of the process of the Bench. The Board had previously exercised this power to recall the order dated 25-5-1995, which originally impleaded Gillette as a party. The CLB noted that it was not bound by the Civil Procedure Code and had the power to regulate its own procedures, guided by the principles of natural justice and acting on discretion. The appellants argued that Gillette made a false statement about its interest in collaborating with the company, thus misleading the CLB. The court acknowledged that the CLB could consider subsequent events under its inherent powers and that the allegations against Gillette remained on record, necessitating an investigation into the truth of those allegations.

2. Appealability of the impugned order:
The respondents contended that the order was not appealable under Order 47 Rule 7 of the Civil Procedure Code, which restricts appeals from review orders. However, the court clarified that the question of appeal from an order of the CLB is governed by section 10F of the Companies Act, which allows appeals on any question of law arising out of such orders. The court noted that the CLB had erred in law by making findings of fact not pleaded and rejecting uncontroverted statements of the appellants, thus raising a question of law. The court also referenced a prior decision where it was held that the addition of a party is a question of law, affirming the appealability of the order.

3. Whether any question of law had been raised under section 10F:
The court found that the CLB erred in law by making findings of fact not pleaded and rejecting uncontroverted statements of the appellants. The allegations against Gillette regarding the apprehended collaboration remained on record, and the CLB was under a duty to ascertain the truth through affidavits. The court emphasized that the truth or falsity of the allegations could not be decided at an interim stage of the proceedings. The court held that the question of whether the CLB could make findings of fact without pleadings raised a question of law under section 10F.

4. Whether the discretion of the CLB warranted interference particularly in view of the order of the Supreme Court dated 20-10-1993:
The court noted that the Supreme Court's order dated 20-10-1993, which allowed preparatory steps for issuing shares to collaborators, was operative when Gillette was added as a party by the CLB. The CLB had previously not considered the existence of the Supreme Court's order material to the issue of impleadment of Gillette. The court found that the CLB had erred in law by rejecting the uncontroverted statements of the appellants and making findings of fact without pleadings. The court concluded that the discretion of the CLB warranted interference due to these legal errors.

Conclusion:
The appeal was allowed, and the order under appeal was set aside. The matter was remanded back to the CLB for a decision based on the affidavits filed. The court emphasized the need for the CLB to ascertain the truth of the allegations through proper affidavits and pleadings. There was no order as to costs.