2007 (10) TMI 689 - Board - Companies Law

Summary

Issues Involved:
1. Allegations of oppression and mismanagement.
2. Maintainability of petitions under Sections 397 and 398 of the Companies Act.
3. Validity and execution of arbitration awards.
4. Jurisdiction of the Company Law Board (CLB).
5. Doctrine of res judicata and finality of judicial decisions.
6. Allegations of delay and laches.
7. Petitioners' locus standi and qualification under Section 399 of the Companies Act.
8. Estoppel and waiver principles.

Detailed Analysis:

1. Allegations of Oppression and Mismanagement:
The petitioners alleged acts of oppression and mismanagement by the respondents in the affairs of the respondent companies. They sought reliefs including the restoration of shareholding, cancellation of transfers, and investigation into the affairs of the companies. The respondents argued that the petitioners were not shareholders and thus had no standing to claim oppression or mismanagement.

2. Maintainability of Petitions under Sections 397 and 398:
The respondents contended that the petitions were not maintainable as the petitioners did not satisfy the conditions precedent for invoking Sections 397 and 398. The petitioners were not shareholders in any sense of the term, and the shares in question had been transferred by court order as part of an arbitration award. The CLB found that the petitioners had no locus standi to maintain the petitions.

3. Validity and Execution of Arbitration Awards:
The arbitration awards had been confirmed by the Bombay High Court and the Supreme Court, making them final and binding. The respondents argued that the petitioners had accepted the benefits of the awards and could not challenge them. The CLB agreed, noting that the awards had attained finality and the petitioners had received the compensation awarded to them.

4. Jurisdiction of the Company Law Board:
The CLB held that it lacked jurisdiction to entertain and adjudicate the petitions under Sections 397 and 398 because the issues originated from an arbitration agreement. The CLB emphasized that the arbitration awards had been decreed and were final, and any disputes arising from them should be addressed by the competent court, not the CLB.

5. Doctrine of Res Judicata and Finality of Judicial Decisions:
The respondents argued that the petitions were barred by the doctrine of res judicata, as the issues had already been decided by the Bombay High Court and the Supreme Court. The CLB agreed, stating that the same claims could not be raised again between the same parties, and the previous judgments and orders were final and binding.

6. Allegations of Delay and Laches:
The petitions were filed in 2006, relating to matters from 1998. The respondents argued that there was considerable delay and laches, which should bar the petitions. The CLB agreed, noting that there had been an unexplained delay of more than eight years, and there was no plea for condonation of delay.

7. Petitioners' Locus Standi and Qualification under Section 399:
The CLB found that the petitioners had no locus standi as they were not shareholders in the respondent companies. The shares had been transferred by court order, and the petitioners had accepted the compensation. The CLB held that the petitioners did not meet the qualifications under Section 399 of the Companies Act to maintain the petitions.

8. Estoppel and Waiver Principles:
The respondents argued that the petitioners could not approbate and reprobate, i.e., take benefits under the awards and then challenge them. The CLB agreed, stating that the petitioners were estopped from challenging the awards after accepting the benefits. The CLB emphasized that a person acting in terms of a court order and taking benefits thereunder cannot later challenge the validity of that order.

Conclusion:
The CLB dismissed the petitions as not maintainable, citing lack of jurisdiction, the finality of arbitration awards, delay and laches, and the petitioners' lack of locus standi. All interim orders were vacated, and no costs were awarded.