2005 (7) TMI 693 - HC - Companies Law

Summary

Issues Involved:
1. Locus standi of the appellant to file the petition.
2. Jurisdiction of the Company Law Board (CLB) to entertain the petition.
3. Allegations of forum shopping by the appellant.
4. Allegations of delay and latches in filing the petition.

Issue-wise Detailed Analysis:

1. Locus Standi of the Appellant:
The CLB determined that the appellant had the locus standi to file the petition as their names were still in the Register of Members and they held more than 10% shares in the company. The CLB noted, "It is admitted by the company that the petitioner's name is in the Register of Members and the parties agree that the agreement to sell was not implemented in the sense no consideration was paid for the shares nor the share certificate together with transfer instruments were lodged with the company for registration of transfer." Therefore, the appellant satisfied the condition of being a member of the company and had the locus standi to present the petition.

2. Jurisdiction of the CLB:
The CLB held that it had the jurisdiction to entertain the petition under Section 68 of the Amendment Act. The relevant observation was, "From a reading of this order we are not in a position to come to a conclusion that the High Court had conferred any jurisdiction on the CLB as it has very specifically stated in that order that CLB would deal with this matter in accordance with law." The petition filed in 1996 was within the jurisdiction of the CLB, and the argument that it amounted to a transfer from the High Court to the CLB was rejected.

3. Allegations of Forum Shopping:
The CLB dismissed the petition on the grounds of forum shopping, stating, "we are of the firm view that the petitioner has definitely indulged in forum shopping/jurisdiction shopping." However, this finding was overturned by the High Court, which noted that the appellant had sought permission to withdraw the petition from the High Court to file it before the CLB for expeditious disposal, and this request was granted without opposition from the respondents. The High Court concluded, "If, in these circumstances, petition is filed before the CLB, same could not be dubbed as 'forum shopping.'"

4. Allegations of Delay and Latches:
The CLB also dismissed the petition on the grounds of delay and latches, despite acknowledging that the Limitation Act did not apply to proceedings before the CLB. The High Court criticized this reasoning, stating, "It is only when there is unexplained and unreasonable delay that would entitle the CLB not to exercise its jurisdiction." The High Court found that the delay was caused by the respondents' dilatory tactics and the petitioner's actions were justified. Therefore, the dismissal on the grounds of delay and latches was deemed erroneous.

Conclusion:
The High Court set aside the CLB's order dated 27th July 1998 and remanded the case back to the CLB for fresh disposal in accordance with the law. The High Court emphasized that the respondents could still press other issues regarding the maintainability of the petition, such as the pendency of related suits and the implications of family settlements. The parties were directed to appear before the CLB on 8th August 2005.