2006 (6) TMI 520 - Board - Companies Law

Summary

Issues:
Stay of proceedings in company petition under Section 111 of the Companies Act, 1956 pending final disposal of civil suit in C.S. No. 128/2003 on the file of the High Court of Judicature at Madras.

Analysis:

Stay Application Arguments:
- The Company and its Managing Director sought a decree and judgment in C.S. No. 128/2003 to declare the petitioner ceased to have any connection with the Company.
- The matter in issue in the company petition is the same as in the civil suit before the High Court of Madras.
- Contentious issues such as the resignation of the petitioner and transfer of shares are being adjudicated in another civil suit.
- Criminal proceedings were initiated regarding the fabrication of letters related to the petitioner's resignation and share transfer.

Opposition to Application:
- The respondent argued that the application is not maintainable and an abuse of the CLB proceeding.
- The civil suit in Vishakapatnam is not connected to the company petition.
- Previous criminal proceedings were deemed purely civil in nature.

Consideration of Section 10 of CPC:
- Section 10 aims to avoid conflicting decisions and save court time.
- Essential conditions for Section 10 include two pending suits on the same matter between the same parties.
- The CLB must examine the subject matter involved in both the High Court and CLB proceedings.
- The issues in the civil suit at Vishakapatnam are relevant to the company petition.
- The High Court proceedings involve disputed letters regarding the transfer of shares and resignation as a director.

Decision and Conclusion:
- The matters in issue in the company petition are directly the same as in C.S. No. 128/2003.
- The High Court's decision will affect the CLB proceedings, leading to conflicting decisions.
- Section 10 of the CPC is applicable in this case.
- The company petition is stayed until the civil suit in C.S. No. 128/2003 is disposed of, as requested in the application.

This detailed analysis showcases the legal complexities and considerations involved in the judgment regarding the stay of proceedings in the company petition pending the final disposal of the civil suit in question.