1994 (4) TMI 348 - HC - Companies Law

Summary

Issues Involved:
1. Discharge of interim administrator and assistant administrators.
2. Restoration of the board of directors of DEPL as it existed on November 23, 1989.
3. Validity of the increase in share capital and allotment of shares.
4. Competence of the third respondent to represent DEPL in ARIL.
5. Maintainability of the application under Section 151 of the Civil Procedure Code and Companies (Court) Rules.

Issue-wise Detailed Analysis:

1. Discharge of Interim Administrator and Assistant Administrators:
The application sought to discharge the interim administrator and assistant administrators and restore the board of directors of Deccan Enterprises Pvt. Ltd. (DEPL) as it existed on November 23, 1989. The court noted that the appointment of the interim administrator had become final after being confirmed by the Supreme Court. The court also mentioned that the interim administrator, C. B. Desai, was continuing in his role as his term was until August 25, 1994.

2. Restoration of the Board of Directors of DEPL as it Existed on November 23, 1989:
The court examined the history of the case, noting that the main issue was the increase in share capital by the third respondent, which was alleged to be an attempt to alter the shareholding in his favor. The court observed that the interim administrator was appointed to manage the affairs of the company during the pendency of the company petition. The court concluded that the application to restore the board of directors was not maintainable as it would effectively amount to a review of the earlier order, which could only be done by the Bench that passed the order.

3. Validity of the Increase in Share Capital and Allotment of Shares:
The court reviewed the background of the share capital increase, noting that the third respondent had increased the share capital by Rs. 5 lakhs and allotted shares to himself and his family members. The petitioners and the ninth respondent criticized this action, alleging it was done without notice to them and was intended to secure majority control. The court referenced earlier judgments that found the increase in share capital to be prima facie unjustified and noted that this issue was central to the company petition.

4. Competence of the Third Respondent to Represent DEPL in ARIL:
The court considered the competence of the third respondent to represent DEPL on the board of ARIL. It noted that previous orders had questioned the third respondent's competence due to allegations of fiduciary abuse and manipulation of records. The court mentioned that this issue had been the subject of multiple appeals and applications, and the previous orders had generally found that the third respondent should not represent DEPL in ARIL.

5. Maintainability of the Application under Section 151 of the Civil Procedure Code and Companies (Court) Rules:
The court examined the maintainability of the application under Section 151 of the Civil Procedure Code and Companies (Court) Rules. It noted that the relief sought in the application was essentially a review of the earlier order, which could only be done under Order 47, Rule 1 of the Civil Procedure Code. The court concluded that it did not have jurisdiction to entertain the review petition as it was not a member of the Bench that had disposed of the appeal against the earlier order.

Conclusion:
The court dismissed the application, finding it devoid of merits and not maintainable. The court emphasized that any modification or alteration of the interim orders would amount to a review, which could only be done by the appropriate Bench under the specific provisions of the Civil Procedure Code. The court also noted that the trial of the main company petition should proceed expeditiously to resolve the underlying issues.