2012 (5) TMI 273 - HC - Companies Law

Allegation of oppressive management - transactions detriment to the shareholders etc. - By an application filed under regulation 46 r/w 44 2nd petitioner-company had sought for impleadment of 15th respondent-another company on the premise that some of the assets of the 1st respondent-company had been transferred in favour of the proposed respondent and therefore, the proposed respondent was a necessary party to resolve the main company petition in a satisfactory manner. - held that - it proper to set aside the order of the Company Law Board dated 30.09.2011, allow this appeal and allow company application No. 49/2011 filed in Company Petition No. 46/2008 before the Company Law Board, Additional Principal Bench, Chennai.

Summary

Issues involved:
1. Application for impleading a respondent in a company petition under Sections 397 and 398 of the Companies Act, 1956.
2. Rejection of the impleadment application by the Company Law Board.
3. Appeal against the Company Law Board's order for impleadment.
4. Consideration of the impleadment application by the High Court.
5. Decision on whether to allow the appeal and implead the additional respondent.

The judgment involves an appeal under Section 10F of the Companies Act against the Company Law Board's order rejecting an application for impleading an additional respondent in a company petition under Sections 397 and 398 of the Act. The petition was based on allegations of oppressive conduct by the 1st respondent company and transactions detrimental to shareholders. The 2nd company petitioner sought equity in the company and relief for shareholders. An application for impleadment of another company, the 15th respondent, was filed on the grounds of asset transfers from the 1st respondent. The High Court had previously remanded the matter to the Company Law Board for re-examination. The proposed respondent opposed the application, denying any involvement with the 1st respondent's affairs. However, the appellants claimed common promoters and asset transfers between the companies, supported by some existing respondents. The High Court, in the interest of justice and a satisfactory resolution, allowed the appeal, set aside the Board's order, and permitted the impleadment application.

The High Court considered the arguments of all parties, acknowledging the prolonged pendency of the matter before the Company Law Board and the need for expeditious disposal. The newly added respondent was given the opportunity to file objections, and other respondents were allowed to supplement their objections with the Board's permission. The Court emphasized the importance of timely resolution by directing the Company Law Board to pay attention to expediting the proceedings. The decision to allow the impleadment application aimed at ensuring a comprehensive resolution of the petition before the Board, despite the proposed respondent's reluctance to join the proceedings. The judgment prioritized a cautious approach to avoid potential complications in the future, favoring inclusivity in the proceedings for a just outcome.