1997 (11) TMI 539 - Board - Companies Law

Issues Involved:
1. Maintainability of the petition under Section 248/250 of the Companies Act, 1956.
2. Whether a petition under Section 250(1) can be filed independently.
3. Invocation of powers under Section 248 in proceedings under Section 250(1).
4. The role of the Company Law Board (CLB) in collecting information and providing relief under the relevant sections.

Issue-wise Detailed Analysis:

1. Maintainability of the petition under Section 248/250 of the Companies Act, 1956:
The respondents raised several preliminary objections regarding the maintainability of the petition under Sections 248 and 250. They argued that no petition can be filed under Section 248 as it deals with the "suo motu" powers of the Company Law Board. They also contended that Section 250(1) deals only with interim relief and not final relief, and thus, no independent petition can lie under this section. Additionally, they claimed that since the petitioners had previously withdrawn their petition under Sections 247/250, the current petition could not proceed. The order concluded that the petition under Section 248/250 could not be maintained, as the powers conferred under Section 250(1) are limited and no final order can be passed after collecting information under Section 248.

2. Whether a petition under Section 250(1) can be filed independently:
The respondents argued that an independent petition under Section 250(1) is not maintainable, as this section deals only with interim relief. However, the petitioners relied on the precedent set in Padma Taparia v. Assam Brook Ltd., which held that an independent complaint under Section 250(1) is entertainable. The judgment clarified that Section 250(1) allows for independent proceedings, and a complaint can be made under this section, provided it is with reference to situations contemplated under Sections 247, 248, or 249. The judgment reaffirmed the maintainability of a petition under Section 250(1).

3. Invocation of powers under Section 248 in proceedings under Section 250(1):
The judgment examined whether the powers under Section 248 could be invoked in proceedings under Section 250(1). It was concluded that Section 248 is silent on the follow-up action after collecting information, and the Company Law Board does not have the scope to provide relief under Section 250(1) after collecting information under Section 248. Therefore, the petition under Section 248/250 was dismissed as not maintainable, as the Company Law Board's role under Section 250(1) is limited to finding out relevant facts about the shares and imposing restrictions as provided in Sub-section (2).

4. The role of the Company Law Board (CLB) in collecting information and providing relief under the relevant sections:
The judgment emphasized that the Company Law Board's role is not to collect evidence for the benefit of a party in a proceeding. The Board can order an investigation under Section 247(1A) if it finds good reasons to do so, but it cannot use the information collected under Section 248 to provide relief to the petitioners under Section 250(1). The judgment clarified that the Company Law Board's powers under Section 250(1) are similar to those in Sections 235 and 237, where the role of the Board ends with the declaration or opinion, and further action rests with the Central Government.

Conclusion:
The petition under Sections 248/250 was dismissed as not maintainable. The judgment reaffirmed the maintainability of an independent petition under Section 250(1) but clarified that the powers under Section 248 could not be invoked in such proceedings. The Company Law Board's role is limited to finding out relevant facts about the shares and imposing restrictions as provided in Section 250(2), without providing further relief based on the information collected.

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