2013 (11) TMI 853 - HC - Companies Law

Scope and extent of CLB s order - Due to allegations of oppression and mismanagement in the appellant s majority share company funds invested in a fixed deposit as per CLB s order for 45 days - Appellant claimed interest on the funds after maturity - Consent decree - Held that - it was clarified by the CLB that it meant and intended that both the principal and the interest accrued shall be reinvested. When once the clarification was given, there was an end of the matter so far as what the CLB intended and that cannot give rise to any question of law - no appeal is maintainable against a consent order - Decided against appellant.

Summary

Issues:
Appeal under Section 10F of the Companies Act, 1956 against CLB order dated 17.05.2013 clarified on 23.07.2013 - Interpretation of directions regarding reinvestment of fixed deposit principal and interest.

Analysis:
1. The appeal was filed challenging the CLB order based on a petition alleging oppression and mismanagement against the majority shareholders. The petition sought protection of funds in a fixed deposit account during the pendency of the case. The CLB directed the bank to invest the funds in a fixed deposit for 45 days to earn interest at a specified rate.

2. The main contention in the appeal was regarding the reinvestment of the fixed deposit principal and interest. The appellant argued that only the principal amount should be reinvested, while the respondents contended that both principal and interest should be reinvested. The CLB clarified its intention that both principal and interest should be rolled over for further periods.

3. The respondents raised defenses against the appeal, including the nature of the CLB order, the authority to file the appeal, and the potential devaluation of the company's assets. They argued that the appeal lacked a legal question and that the interim order was necessary to protect minority shareholders' interests.

4. The Court addressed the preliminary objections, confirming the authorization to file the appeal and rejecting the argument that no legal question arose. The Court emphasized that the CLB's order was an interim measure to safeguard the parties' interests and that interference was unwarranted unless the discretion was exercised improperly.

5. Ultimately, the Court dismissed the appeal, emphasizing that the CLB's order was meant to protect the parties' interests during the proceedings. The Court highlighted the importance of not scrutinizing interim orders excessively and upheld the CLB's clarification regarding the reinvestment of both principal and interest.

In conclusion, the Court upheld the CLB's order, emphasizing the protective nature of the interim measure and dismissing the appeal due to the lack of legal questions and the proper exercise of discretion by the CLB.