2000 (1) TMI 930 - HC - Companies Law

Issues Involved:
1. Allegations of mismanagement and mishandling of funds in Asoka Betelnut Company Pvt. Ltd.
2. Restoration of the main petition dismissed for non-prosecution.
3. Request for holding Company Law Board sittings at Madras instead of New Delhi.

Detailed Analysis:

1. Allegations of Mismanagement and Mishandling of Funds:
The case originated from disputes within the family members who were directors of Asoka Betelnut Company Pvt. Ltd. Chandrakanth, one of the directors, filed a petition under sections 397 and 398 of the Companies Act, 1956, alleging mismanagement and mishandling of funds by other directors, and sought the winding up of the company. This petition was initially addressed by a single judge, but on appeal (O.S.A. No. 221 of 1996), a Division Bench reversed the single judge's orders and dismissed the company petition.

2. Restoration of the Main Petition Dismissed for Non-Prosecution:
Following the dismissal of the initial petition, the wife and son of Chandrakanth, along with other directors, filed a new petition under sections 397 and 398. This petition was dismissed for non-prosecution, leading to the filing of C.A. No. 179 of 1998 to restore the main petition. The Principal Bench of the Company Law Board allowed the restoration, which was contested by the respondent in C.M.A. No. 1508 of 1998. The court upheld the restoration, noting that the non-appearance of counsel was due to a genuine mistake in noting the hearing date.

3. Request for Holding Company Law Board Sittings at Madras:
The appellant requested that the Principal Bench of the Company Law Board hold its sittings at Madras due to the convenience of the majority of directors residing in Coimbatore, and to avoid unnecessary travel expenses. This request was made in Company Application No. 77 of 1998 in C.P. No. 76 of 1997. The Principal Bench disposed of this application without a definitive order, leading to the filing of C.M.A. No. 1507 of 1998. The court noted that regulation 4 of the Company Law Board Regulations, 1991, allows the Principal Bench to decide the place and time of sittings, and found no merit in the appellant's grievance regarding the handling of the application.

Judgment Summary:
The court dismissed both C.M.A. No. 1507 of 1998 and C.M.A. No. 1508 of 1998. It held that the Principal Bench of the Company Law Board acted within its discretion as provided by regulation 4 of the Company Law Board Regulations, 1991, in deciding the place and time of sittings. The court also upheld the restoration of the main petition, emphasizing that the dismissal for non-prosecution was not on merits but due to a genuine mistake in noting the hearing date. The inherent powers of the Company Law Board under regulation 44 were acknowledged, but the court clarified that regulation 26, which provides for setting aside ex parte orders, was applicable in this case. The court concluded that the Principal Bench's decision to restore the petition was justified and did not find any legal error in the process.

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