1998 (7) TMI 704 - Board - Companies Law

Summary

Issues Involved:
1. Locus Standi of the Petitioner
2. Jurisdiction of the Company Law Board
3. Allegations of Forum Shopping/Jurisdictional Shopping
4. Limitation and Delay in Filing the Petition
5. Parallel Proceedings

Issue-wise Detailed Analysis:

1. Locus Standi of the Petitioner:
The petitioner, holding 15% shares in the company, claimed to have locus standi under Section 397/398 of the Companies Act, 1956. The respondents argued that since the petitioner had agreed to sell his shares, he should not be considered a member under Section 399. However, the Board held that since no consideration for the shares was exchanged and the share certificates were still with the petitioner, he remained a member of the company with more than 10% shareholding, thus qualifying to present the petition.

2. Jurisdiction of the Company Law Board:
The respondents contended that the Company Law Board lacked jurisdiction due to Section 68 of the Companies (Amendment) Act, 1988, which mandates that pending matters in the High Court should continue there. The Board clarified that the High Court's order allowing the withdrawal of the petition and granting liberty to file before the Company Law Board did not confer jurisdiction but allowed the Board to deal with the petition in accordance with the law. Since the petition was filed in 1996, after the jurisdiction had been transferred to the Company Law Board, the Board had the jurisdiction to hear the case.

3. Allegations of Forum Shopping/Jurisdictional Shopping:
The respondents accused the petitioner of forum shopping, arguing that withdrawing the petition from the High Court and refiling it before the Company Law Board constituted an abuse of the process of law. The Board noted that the allegations in both petitions were practically identical and that the petitioner had actively pursued the matter in the High Court for over six years. The Board concluded that the petitioner's actions amounted to forum shopping and an abuse of the process of law.

4. Limitation and Delay in Filing the Petition:
The respondents argued that the petition was barred by limitation as it dealt with events prior to 1990 and was filed only in 1996. The petitioner countered that the effects of the alleged acts of oppression and mismanagement were continuing. The Board acknowledged that while the Limitation Act does not apply to proceedings before it, abnormal delay is considered. Given the six-year gap and the similarity of allegations to the earlier petition, the Board found the petition to be significantly delayed and suffering from laches.

5. Parallel Proceedings:
The respondents highlighted that a similar suit was still pending in the Delhi High Court, suggesting the petitioner was pursuing two remedies simultaneously. The petitioner argued that the suit in the High Court was related to partition of family properties and did not cover the allegations of oppression and mismanagement in the company. The Board did not specifically address this issue in the final decision, focusing instead on the forum shopping and limitation aspects.

Conclusion:
The petition was dismissed on grounds of forum shopping and significant delay. The Board emphasized that the petitioner's actions constituted an abuse of the process of law, and the petition suffered from grave limitation issues. The petition was dismissed without delving into the merits of the allegations, with no order as to costs.