2010 (1) TMI 583 - HC - Companies Law

Application under section 403 praying for vacating of this order - Held that - In the impugned order, the Company Law Board has not done anything more than directing the appellants to adhere to the procedures in accordance with law and it can never be termed as an order adverse to the interest of the appellants. If the Company Law Board has restrained the appellants from embarking on such acts, not permitted in law, it cannot be characterised in law to be an order prejudicial to the interest of the appellants or to the Company. It does not require any authority or wisdom to say that no shareholder of a Company should be allowed to act to the prejudice or detrimental to the interest of the Company of which himself or herself is a shareholder. An innocuous order of this nature can never be said to be giving raise to a cause of action or can the appellant be said to be aggrieved by such an order warranting examination of merits of such an order in an appeal under section 10F of the Act. Appeal has absolutely no merits

Summary

Issues:
Delay in filing appeal, maintainability of appeal under section 10F of the Companies Act, interpretation of the order passed by the Company Law Board, examination of the merits of the appeal.

Delay in filing appeal:
The appeal was filed with a delay of 31 days, and a separate application was submitted for condonation of the delay. The Court allowed the application, condoned the delay, and proceeded to hear the appeal on its merits.

Maintainability of appeal under section 10F of the Companies Act:
The Registry raised a preliminary objection regarding the maintainability of the appeal under section 10F of the Act. The Court considered this objection but decided to examine the merits of the appeal while leaving the question of maintainability open for future consideration.

Interpretation of the order passed by the Company Law Board:
The order under appeal was passed on an application filed under section 403 of the Companies Act by the respondent-company, seeking to vacate an earlier interim order. The Court analyzed the contents of the order and the arguments presented by both parties, ultimately concluding that the order was justified and in line with statutory provisions.

Examination of the merits of the appeal:
The Court found the appeal to be meritless despite strong arguments from the appellant's counsels. It emphasized that the order merely directed the appellants to follow legal procedures and did not prejudice their interests. The Court dismissed the appeal, stating that the order by the Company Law Board was appropriate and did not warrant interference.

In summary, the High Court of Karnataka addressed the delay in filing the appeal, the maintainability of the appeal under section 10F of the Companies Act, the interpretation of the order passed by the Company Law Board, and the examination of the merits of the appeal. The Court allowed the appeal to proceed, examined the order's contents, and ultimately dismissed the appeal, affirming the Company Law Board's decision as justified and in accordance with statutory provisions.