1994 (7) TMI 362 - Board - Companies Law

Summary

Issues Involved:
1. Non-registration of bonds by Nuclear Power Corporation of India Ltd.
2. Applicability of the Special Court (Trial of Offences Relating to Transactions in Securities) Amendment Ordinance, 1994, to the Company Law Board.
3. Jurisdiction of the Company Law Board vis-`a-vis the Special Court.

Detailed Analysis:

1. Non-registration of bonds by Nuclear Power Corporation of India Ltd.:

M/s. Canara Bank, acting as the principal trustee of Can Bank Mutual Fund, filed a petition under Section 111(2) and Section 111(4) of the Companies Act, 1956, on November 27, 1992. The petition was regarding the non-registration of 9% NPC Bonds worth Rs. 50 crores, purchased on February 27, 1992. The respondents included Nuclear Power Corporation of India Ltd., Shri Hiten P. Dalai (a notified person under the Special Court Act, 1992), Andhra Bank Financial Services Ltd., and Standard Chartered Bank. Shri Hiten P. Dalai acted as a broker in the transaction, and Standard Chartered Bank also claimed title to these bonds.

2. Applicability of the Special Court (Trial of Offences Relating to Transactions in Securities) Amendment Ordinance, 1994, to the Company Law Board:

During the proceedings, it was noted that the Special Court (Trial of Offences Relating to Transactions in Securities) Amendment Ordinance, 1994, had come into effect, later becoming an Act on March 28, 1994. The Ordinance's applicability was debated, particularly whether it withdrew the Company Law Board's jurisdiction over transactions involving notified persons between April 1, 1991, and June 6, 1992. The transaction in question fell within this period, necessitating a hearing on the Ordinance's applicability.

3. Jurisdiction of the Company Law Board vis-`a-vis the Special Court:

Nuclear Power Corporation of India Ltd. argued that the Ordinance applied to the Company Law Board, thereby transferring proceedings to the Special Court. This was contested by Standard Chartered Bank, which argued that the Company Law Board is not a court as defined in the Ordinance. The argument centered on whether the Company Law Board could be considered a "civil court." The definition of "court" under Section 2(11) of the Companies Act and the jurisdiction outlined in Section 10 were discussed. It was argued that Section 10E, dealing with the Company Law Board, should be considered part of Section 10, thus making the Board a court under the Companies Act.

The Company Law Board examined various legal precedents and definitions, including those from the Supreme Court, to determine whether it constituted a court. It was concluded that the Company Law Board is not a court under the Companies Act or the Civil Procedure Code. The Board exercises both judicial and non-judicial functions, unlike a strict court, which only exercises judicial functions.

The Board referred to its previous decision in Carbon Corporation of India Ltd. v. Abhudaya Properties P. Ltd., which concluded that the Company Law Board is not a court. The Ordinance aimed to expedite the disposal of cases involving notified persons by transferring them from civil courts to the Special Court. However, the Company Law Board's jurisdiction under the Companies Act remained unaffected by the Ordinance.

Conclusion:

The Company Law Board concluded that the Special Court Amendment Act, 1994, did not apply to its proceedings. The Board retained its jurisdiction and powers to deal with matters relating to securities under the Companies Act, 1956. The main petition was scheduled for further hearing on October 3, 1994.

Ordered accordingly.