2014 (5) TMI 1155 - HC - Companies Law

Application for modification of the earlier order and permitting the sale of certain assets of the respondent No.1-Company - Held that - Under Section 10(F) of the Companies Act, appeal has been provided against the order of the Company Law Board to this Court on any question of law arising out of such order. The arguments which have been advanced by the counsel for the appellants reveals that these are the issues relating to fact and not to the pure question of law, therefore, no ground is made out at this stage to entertain the present miscellaneous company appeal. Considering the nature of grievance which the appellants has raised before this Court and also considering the stand of the respondents before this Court, it is of the opinion that interest of justice would be served in permitting the appellants to file an appropriate application before the Company Law Board raising the grievance which they have raised before this Court, and also permitting the appellants to make a request to the learned Judge appointed by the Company Law Board as Observer- Cum-Facilitator to not to proceed with the sale of the assets of the respondent No.1-Company till the application, if any, in pursuance to the liberty granted by this Court is decided by the Company Law Board.

Summary

Issues:
Challenge to Company Law Board order allowing modification for sale of assets.

Analysis:
The appeal under Section 10(F) of the Companies Act, 1956 was filed by the appellants challenging the Company Law Board's order allowing the respondents' application for the modification of an earlier order, which permitted the sale of certain assets of the respondent No.1-Company. The appellants had initially filed a Company Petition alleging oppression and mismanagement by respondents No.2 to 11. The Company Law Board had found a prima facie case in favor of the appellants and directed the maintenance of status quo regarding the immovable assets. Subsequently, the respondents filed an application for modification/vacating of the interim order, which was decided by the Company Law Board, allowing the sale of certain properties under supervision.

The main argument raised by the appellants was that the necessity of the sale of the properties was not considered by the Company Law Board. The respondents contended that the appeal did not involve any substantial question of law and suggested that the proper remedy for the appellants was to approach the Company Law Board and the appointed Judge to withhold the sale pending a decision.

The Court noted that the issues raised were related to facts rather than pure questions of law, hence not sufficient to entertain the appeal at that stage. However, considering the nature of the grievance raised by the appellants and the stand of the respondents, the Court opined that justice would be served by allowing the appellants to file an application before the Company Law Board raising their concerns and requesting the appointed Judge not to proceed with the sale until the application was decided.

Consequently, the appeal was dismissed with the observation that the appellants could approach the Company Law Board and the appointed Judge to address their grievances regarding the sale of assets.