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2018 (5) TMI 415 - Tri - Companies LawMaintainability of appeal - invoking jurisdiction of the Hon ble Company Law Board - time barred - Held that - Since the acts complained of in the Petition have not occurred at a time when the Petitioners would have been eligible to invoke the jurisdiction of the Hon ble Company Law Board and the delay in coming to the Company Law Board in the year 2013 clearly debars the right to the Petitioners to invoke the jurisdiction u/s 397 and 398. The view taken by the Hon ble National Company Law Tribunal in the matter of M/s. Esquire Electronics Inc. v. Netherlands India Communications Enterprises Ltd. 2016 (10) TMI 1107 - NATIONAL COMPANY LAW TRIBUNAL is squarely applicable to the present case also. Thus, we hold that the Company Petition is hopelessly time barred and the Petitioners have not explained any reason as to why there has been lot of delay in filing the Company Petition at the relevant point of time. The acts complained of in the Company Petition are not continuous in nature or which can be attributable to the period that would have enabled the Petitioners to invoke its jurisdiction of the Company Law Board under Section 397 and 398 of the Companies Act, 1956. Therefore, the issue (a) is decided in favour of the Respondents. A careful reading of the entire material on record alone reveals the whole game plan of the Petitioners to invoke the jurisdiction of Hon ble Company Law Board. It can also be seen that the Petitioners have resorted to repetition of agitating the issues and carefully drafted this Petition to suit the requirements of Sections 397 and 398 of Companies Act, 1956. The reliefs claimed therein are moderately changed and then this Petition came to be filed. Therefore, the issue (b) is decided in favour of the Respondents. The entire case is based on a private agreement dated 7th September, 1991, which was executed between the parties even before the Respondent Company is incorporated. The Petitioners are seeking to enforce the terms and conditions of the said agreement against the Company and Directors, which is impermissible under law. In view of the above, we hold that the issue (c) is decided in favour of the Respondents. It can also be seen some proceedings before the Civil Courts have been dismissed against the Petitioners or some of them pending at the Appellate stage. We are of the view that the parties to this Company Petition and the parties in the other litigations, either before Civil Court or High Court, are more or less or at least partially the same. The underlying principle of res judicata is that a decision once rendered by a competent authority on a matter in issue between the parties after a full enquiry should not be permitted to be re-agitated. We, therefore, hold that the principle of res judicata is squarely applicable to the present case and the issue (d) is decided against the Petitioners. The provisions of Sections 397 and 398 of the Companies Act, 1956 will certainly come to the rescue of the Petitioners if the allegations made against the Respondents are such that unless with the intervention of the Tribunal the affairs of the Company cannot be conducted in a fair manner wherein the rights of the parties against the Company are properly upheld and the statutory duties are complied with in a proper manner. But the present case is completely devoid of any merits in so far as Sections 397 and 398 are concerned. It also gives an impression, the manner in which the Petitioners filed cases one after another in various Forums, that they are habitual litigants who are interested in unjust enrichment at the cost of litigation and are not at all interested in the welfare of the Company. Therefore, we are of the opinion that the Petitioners have not come to the Court with clean hands and the issue (e) is decided in favour of the Respondents.
Issues Involved:
1. Whether the Petition is time-barred and whether the Limitation Act is applicable. 2. Whether the acts complained of are continuous in nature and fall under Sections 397 and 398 of the Companies Act, 1956. 3. Whether a private agreement dated 7th September, 1991 binds the Respondent Company. 4. Whether the Company Petition is barred by the principle of res judicata. 5. Whether the Petitioners approached the Company Law Board with clean hands and engaged in forum shopping. Detailed Analysis: 1. Whether the Petition is time-barred and whether the Limitation Act is applicable: The Tribunal held that the Company Petition is "hopelessly time-barred." The acts complained of occurred between 1991 and 1998, and the Petitioners failed to explain the delay in filing the Petition in 2013. The Tribunal referenced the case of *Esquire Electronics Inc. v. Netherlands India Communications Enterprises Ltd.*, which stated that the Limitation Act, 1963 applies to proceedings before the Tribunal, and the period of limitation is three years. Since the Petitioners did not act within this period, the issue was decided in favor of the Respondents. 2. Whether the acts complained of are continuous in nature and fall under Sections 397 and 398 of the Companies Act, 1956: The Tribunal found that the acts complained of were not continuous in nature and did not relate to the period when the Company Petition was filed. The Petitioners had dressed up the Petition to fit the requirements of Sections 397 and 398, but the material on record revealed that the issues were not ongoing. Therefore, this issue was also decided in favor of the Respondents. 3. Whether a private agreement dated 7th September, 1991 binds the Respondent Company: The Tribunal noted that the entire case was based on a private agreement executed before the incorporation of the Respondent Company. The Petitioners sought to enforce the terms of this agreement against the Company and its Directors, which the Tribunal deemed impermissible under law. Consequently, this issue was decided in favor of the Respondents. 4. Whether the Company Petition is barred by the principle of res judicata: The Tribunal held that the principle of res judicata applied to the present case. The Petitioners had invoked various forums, including Civil and Criminal Courts, based on the same agreement dated 7th September, 1991. The Tribunal emphasized that a decision once rendered by a competent authority should not be re-agitated. Therefore, this issue was decided against the Petitioners. 5. Whether the Petitioners approached the Company Law Board with clean hands and engaged in forum shopping: The Tribunal concluded that the Petitioners had not approached the Tribunal with clean hands. They engaged in forum shopping by invoking the jurisdiction of various forums and indulging in vexatious litigation. The Tribunal found that the Petitioners were more interested in unjust enrichment than in the welfare of the Company. Hence, this issue was decided in favor of the Respondents. Conclusion: The Tribunal dismissed the Company Petition No. 109/397-398/CLB/MB/MAH/2013 on all counts, finding it not maintainable. The Petitioners were ordered to pay costs of ?1,00,000/- each.
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