2007 (10) TMI 405 - HC - Companies Law

Investigation of company s affairs - seeking direction to the 1st respondent to appoint a competent person as investigator for investigating the affairs of the 3rd respondent Company from 1995 onwards and to file a report before this Court and to pass suitable orders - Held that - When the power is conferred on the Company Law Board, it is incumbent on the petitioner to approach that statutory Board which shall examine and do justice, as the circumstances demand. In such circumstances, there arise no reason for exercising the discretionary power vested in this Company Court to direct such investigation or declare that it needs investigation by the Central Government. As can be seen from the different provisions of the Act, and also the scheme of the Act, since the petitioner is having a remedy to approach the Company Law Board or to invoke such other remedies available to him under law or under the provisions of the Companies Act, the petitioner is given liberty to pursue the other legal remedies available to him, in accordance with law.

Summary

Issues:
1. Jurisdiction of Writ Court under Article 226 of the Constitution of India in light of the Companies Act, 1956.
2. Petitioner's request for a writ of mandamus to appoint an investigator for a company's affairs.
3. Allegations of fraud and mismanagement by the company's directors.
4. Remedies available to the petitioner under the Companies Act, 1956, including approaching the Company Law Board.

Analysis:

1. The main issue in this case revolved around the jurisdiction of a Writ Court under Article 226 of the Constitution of India concerning the Companies Act, 1956. The petitioner argued that directions could be issued by a Writ Court under the mentioned provisions. However, the respondent contended that the appropriate remedy for the petitioner was to approach the Company Law Board as per the Companies Act, 1956, making the writ petition not maintainable.

2. The petitioner sought a writ of mandamus to appoint a competent person as an investigator to look into the affairs of a specific company from 1995 onwards. The petitioner, along with relatives, had invested in the company in 1995 but had not received any returns or communication from the company since then. Allegations of deliberate omissions and commissions by the company were raised, leading to the request for an investigation.

3. The counter affidavit filed by the 2nd respondent provided details about the company's incorporation and operations. It refuted the petitioner's claims of not receiving annual reports or notices, highlighting the challenges faced by the Registrar of Companies due to a large number of companies under its jurisdiction. The respondent suggested that the petitioner should have approached the Court of Special Judge for Economic Offences under the Companies Act, 1956, instead of filing the writ petition.

4. The judgment emphasized the availability of remedies under the Companies Act, 1956, particularly sections 235 to 237. It clarified that the petitioner could have approached the Company Law Board, a statutory body specialized in such matters, for investigation. The judgment highlighted the discretionary power of the Central Government under section 237 of the Act and directed the petitioner to pursue legal remedies available under the law.

In conclusion, the Writ Petition was disposed of, granting the petitioner the liberty to pursue other legal remedies available to them in accordance with the law.