2016 (1) TMI 466 - HC - Companies Law

Oppression and mismanagement - petitioners contend that the entire paper ballot is bad in law - question of law v/s question of facts - Held that - On the face of the order of the CLB, it can be seen that considering the poll on the day, the 7th respondent was declared to have lost. It was also observed that he did not raise any objections during the voting. So the CLB has held that no prima facie case was made out. It has considered the questions of law but has only refrained itself from adjudicating on the issue of voting pattern for the time being. The CLB has given findings on all the tests required for grant of interim reliefs. It is not necessary for the CLB to specifically use the words, prima facie case, balance of convenience and irreparable loss. It is sufficient if specific findings on the tests are given. Upon perusal of the order it is clear that the CLB has given findings in page 6, 7 and 8 of its order. Therefore, this court does not agree with the contentions of the Learned Senior Counsel for the petitioners that the CLB has not considered the questions raised before it. In so far as the personal grievance of the 7th respondent is concerned, there are specific findings in para 6 of the order of the CLB at pages 6 and 7 of the order. The communication of the 7th respondent has been referred to in page 7 of the order of the CLB indicating that the grievance is not just the elections. Again considering all these aspects only, this court in a nutshell held that there is no perversity in the findings of the CLB and the questions raised are not pure questions of law. Hence, there is no error apparent on the face of the record, warranting interference. In so far as oppression is concerned, any decision on the same can be arrived at only if the other questions are decided. On the face of it, the 7th respondent has been permitted to participate in the elections and his family members have been permitted to vote. Therefore, again mindful of the prejudice, that may be caused before the CLB, this court held in para 23 that the same would have to be decided by the CLB during the final hearing. The CLB has exercised its discretion against the appellants after giving reasons. Even if prima facie case, regarding a question of law is made out, the interim relief can be denied. All the tests required for grant of interim relief must be satisfied. This court has already given its findings in Paragraphs 18 and 19. It is pertinent to mention here that this Court has only held that no pure question of law have been raised. The above only implies that the decision on the question of law is dependent on appraisal and decisions on various facts and interpretation of the provision and will of the parties regarding the election process. Hence, there is no error in the findings of this court. On consideration of facts, no new grounds have been made out and the points agitated were already negated by this Court in its earlier order. An attempt is only now made to re-appreciate the same contentions. The applications to review cannot be used as a substitute to file an appeal.

Issues Involved:
1. Maintainability of the appeals under Section 10F of the Companies Act.
2. Validity of the election process and interim relief sought.
3. Applicability of e-voting and exclusion of other voting methods.
4. Review of the Company Law Board's (CLB) decision and the High Court's previous order.

Detailed Analysis:

1. Maintainability of the Appeals under Section 10F of the Companies Act:
The petitioners contended that the appeals were maintainable as they raised pure questions of law, specifically questions 7 to 10, which were not considered by the court. They argued that non-consideration of these questions constituted an error apparent on the face of the record. The relevant legal provisions cited included Sections 106 to 109 of the Companies Act, 2013, and Rule 20 of the Companies (Management and Administration) Rules. The petitioners drew attention to the procedural requirements for e-voting and argued that the voting by other means was barred once e-voting was decided. They also referenced several judgments to support their contention that questions of law were involved.

2. Validity of the Election Process and Interim Relief Sought:
The petitioners sought interim relief to enable the 7th respondent to continue as a Director, arguing that the election process was irregular and oppressive. The CLB had refused to grant interim relief, and this decision was upheld by the High Court. The petitioners argued that the failure to consider the merits of the case and grant interim relief itself constituted a question of law. The respondents countered that the review against the orders passed in an appeal under Section 10F was not maintainable and that there was no error apparent on the face of the record. The High Court had previously found no perversity in the CLB's order and held that the questions raised were not purely questions of law but mixed questions of law and fact.

3. Applicability of E-voting and Exclusion of Other Voting Methods:
The petitioners argued that once e-voting was decided, voting by other means, such as paper ballots, was barred. They contended that the scrutinizer was required to block votes registered in e-voting and submit a report to the chairman, making paper ballot voting invalid. The respondents argued that the provisions did not bar voting at the place of the meeting and that the notification dated 19.03.2015 amending the Companies (Management and Administration) Rules 2014 would only have prospective effect. The High Court held that the question of whether e-voting bars other types of voting required adjudication of the main petition before the CLB and was a mixed question of fact and law.

4. Review of the CLB's Decision and the High Court's Previous Order:
The petitioners sought a review of the High Court's order dated 27.04.2015, arguing that there was an error apparent on the face of the record as the questions of law were not considered. The respondents contended that the review petitions were not maintainable and that the High Court had already considered the pleas raised and given a finding. The High Court reiterated that the grant of interim relief is discretionary and that it had already found no perversity in the CLB's order. The court also emphasized that the scope for interference in the matter of discretionary reliefs is very limited and that the CLB had given specific findings on the tests required for granting interim reliefs. The court concluded that there was no error apparent on the face of the record warranting interference and dismissed the review petitions.

Conclusion:
The High Court dismissed the review petitions, holding that the appeals under Section 10F were not maintainable as they involved mixed questions of law and fact. The court found no error apparent on the face of the record in its previous order and upheld the CLB's decision to refuse interim relief. The court emphasized that the questions raised required adjudication of the main petition and could not be decided at the introductory stage. The review petitions were dismissed with no costs.

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