2005 (2) TMI 545 - HC - Companies Law

Issues Involved:
1. Mismanagement and oppression of minority shareholders.
2. Interim reliefs granted by the Company Law Board (CLB).
3. Jurisdiction of the High Court to modify its own orders after the dismissal of a Special Leave Petition (SLP) by the Supreme Court.
4. Validity of the Extraordinary General Meeting (EGM) and the resolutions passed therein.

Detailed Analysis:

1. Mismanagement and Oppression of Minority Shareholders:
The respondents filed Company Petition No. 62 of 2003 before the CLB under sections 397, 398, 403, and 404 of the Companies Act, 1956, alleging mismanagement and oppression by the majority shareholder in the affairs of Utkal Motors (P.) Ltd. The respondents sought interim reliefs, which were granted ex parte by the CLB on 2-7-2003.

2. Interim Reliefs Granted by the CLB:
The CLB's interim order on 2-7-2003 granted reliefs as prayed in paragraphs 51(i), (ii), and (v) of the company petition. The appellants filed a reply and sought to vacate the interim order. The CLB passed further orders on 11-9-2003 and 1-10-2003, which were challenged by the appellants under section 10F of the Act. The High Court admitted the appeal and stayed the CLB's orders on 3-11-2003. The respondents' subsequent Misc. Case Nos. 8 and 10 of 2004 sought modification of the High Court's order dated 14-5-2004 to restore the interim orders of the CLB.

3. Jurisdiction of the High Court to Modify its Own Orders After Dismissal of an SLP:
The appellants contended that modifying the High Court's order dated 14-5-2004 after the Supreme Court dismissed the SLP would constitute an affront to the Supreme Court. They cited the Supreme Court's decision in Abbai Maligai Partnership Firm v. K. Santhakumaran, which held that the High Court should not review its order after the dismissal of an SLP. The respondents argued that the dismissal of an SLP does not amount to confirmation of the High Court's judgment and cited Bhaskaran v. Sreedharan to support their submission.

The High Court held that any modification of its order dated 14-5-2004 would amount to a review, which is not permissible after the dismissal of the SLP. The Court emphasized that such a review would be subversive of judicial discipline and would affront the Supreme Court's order.

4. Validity of the EGM and the Resolutions Passed Therein:
The respondents alleged that the EGM held on 25-8-2004, which purportedly removed respondent No. 1 from the Board of directors, was invalid due to several procedural defects. They sought to declare the EGM and the resolutions passed therein as null and void. The appellants argued that the shareholders had the right to remove a director under the Companies Act and the articles of association. They contended that the High Court's jurisdiction under section 10F is limited to questions of law arising from CLB orders and that the respondents should seek relief from the appropriate forum for the new cause of action.

The High Court concluded that it does not have jurisdiction under section 10F to declare the EGM resolutions as void or to stay them. The Court stated that such matters involve disputed questions of fact that should be determined by a forum with original jurisdiction, such as the civil court or the CLB.

Conclusion:
The Miscellaneous Cases were dismissed, and the interim orders staying the resolution adopted at the EGM held on 25-8-2004 were vacated. The High Court reiterated that it cannot review its own orders after the dismissal of an SLP by the Supreme Court and that any new cause of action must be addressed by the appropriate forum.

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