2013 (2) TMI 899 - HC - Companies Law

Summary

Issues involved:
The judgment involves issues related to company petition before the Company Law Board seeking interim reliefs, refusal of interim reliefs by the Board, appeal filed under Section 10F of the Companies Act, 1956, arguments on oppression of company affairs, maintainability of the appeal based on questions of law, lack of reasons for refusal of interim reliefs, and the need for legal considerations in granting interim reliefs.

Company Petition and Interim Reliefs:
The appellants filed a company petition before the Company Law Board seeking interim reliefs to restrain certain actions by the respondents, including convening meetings without approval, holding General Meetings, making alterations to the Board of Directors, and acting upon resolutions passed at a Board Meeting.

Refusal of Interim Reliefs:
The Board passed an order refusing the interim reliefs sought by the appellants, stating that decisions in the General Meeting should be left to the shareholders, with a directive for a counter to be filed by the respondents within four weeks. The appellants, aggrieved by the refusal, filed an appeal under Section 10F of the Companies Act, 1956.

Appeal and Legal Arguments:
In the appeal, the appellants argued that the impugned order was unsustainable as per Section 397 of the Act, alleging oppression in the conduct of company affairs. They contended that the Board failed to consider crucial facts and legal rights, leading to an illegal order. The respondents argued against the maintainability of the appeal, stating no question of law was involved.

Legal Considerations and Reasons for Refusal:
The High Court emphasized the need for a question of law to arise from the impugned order for an appeal to be entertained. It criticized the lack of reasons for refusing the interim reliefs, stating that orders passed without reasons are against natural justice. The Court highlighted the importance of legal rights, evidence, and prima facie proof in granting interim reliefs.

Setting Aside the Impugned Order:
The Court set aside the impugned order and remitted the matter to the Board for fresh consideration within a month. It directed that decisions from the General Meeting be subject to the Board's order and mandated notice to all Directors for any meetings held by the respondents until the matter is disposed of. The appeal was allowed in favor of the appellants.