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2010 (3) TMI 672 - HC - Companies LawWhether C.P. No. 81 of 2009, filed by the respondents, invoking sections 397 and 398, read with section 402 of the Companies Act, 1956, is not maintainable before the Company Law Board, as the respondents are not qualified to file the said petition, as per section 399 of the said Act? Held that - In view of the averments made on behalf of the petitioners, as well as the respondents and on a perusal of the records available this court finds it appropriate to direct the Company Law Board, Chennai Bench, to hear and dispose of C.A. No. 112 of 2009 and C.A. No. 113 of 2009, as well as C.A. No. 26 of 2010, as preliminary issues, on merits and in accordance with law, as expeditiously as possible, unless there are impediments, either legal or factual, which may arise, during the course of the proceedings. Accordingly, the civil revision petition is disposed of, with the above directions. No costs. Consequently, connected miscellaneous petition is closed. It is made clear that it would be open to the respondents to move any other application, if they find it necessary, before the Company Law Board, during the pendency of C.P. No. 81 of 2009.
Issues Involved:
1. Maintainability of civil revision petition under section 10F of the Companies Act, 1956 to strike off C.P. No. 81 of 2009. 2. Allegations of deceit and fraud in obtaining interim orders by the respondents. 3. Jurisdiction of the Company Law Board to decide preliminary issues and maintainability of the company petition. 4. Dispute over share allotment and restoration of original shareholding pattern. 5. Powers of the Company Law Board to decide on preliminary issues and inherent powers. Analysis: Issue 1: Maintainability of civil revision petition under section 10F of the Companies Act, 1956 The civil revision petition sought to call for records connected with C.P. No. 81 of 2009 and strike it off under section 10F of the Companies Act, 1956. The petitioners challenged the maintainability of the respondents' petition, citing non-fulfillment of mandatory requirements under section 399 of the Act. They argued that the respondents, by making false allegations, were abusing the legal process and causing a halt in the business operations of the company. Issue 2: Allegations of deceit and fraud in obtaining interim orders The petitioners alleged that the respondents obtained interim reliefs from the Company Law Board based on deceit and fraud. They contended that the respondents, after transferring a substantial number of shares in accordance with a shareholder agreement, were ineligible to file C.P. No. 81 of 2009. The petitioners sought the dismissal of the petition on these grounds. Issue 3: Jurisdiction of the Company Law Board and maintainability of the company petition The respondents argued that the Company Law Board had the authority to decide on preliminary issues and that the issue of maintainability could be heard along with the main petition. They claimed that the transfer of shares was questioned, making the company petition maintainable under section 399 of the Companies Act, 1956. Issue 4: Dispute over share allotment and restoration of original shareholding pattern The respondents filed C.P. No. 81 of 2009 seeking various reliefs, including the restoration of the original shareholding pattern of the company. They contended that the transfer of shares after a specific date was null and void, and they sought to restore the shareholding as it stood before that date. Issue 5: Powers of the Company Law Board to decide on preliminary issues and inherent powers The court directed the Company Law Board to hear and dispose of the preliminary issues raised by the petitioners and respondents expeditiously. It emphasized the Board's authority to decide on such matters and highlighted the importance of resolving legal disputes promptly to prevent undue delays in business operations. In conclusion, the judgment addressed the complex legal issues surrounding the maintainability of the company petition, jurisdiction of the Company Law Board, and the validity of interim orders obtained. It underscored the need for timely resolution of disputes to safeguard the interests of all parties involved and ensure the smooth functioning of the company's operations.
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