2019 (9) TMI 76 - HC - Companies Law

Oppression and Mismanagement - Power of CLB to decide the issue of salary - section 397/398/402 and 403 of The Companies Act, 1956 - disbursement of outstanding salary of the intervener for the month of November 2013 - HELD THAT - The CLB is free to pass orders as long as they are in the interest of proper conduct of the affairs of the Company. Earlier also the CLB had passed the order dated 28.02.2013 by which it had made certain directions regarding the employees of the company including that the employees shall not be suspended or terminated. It is manifest from the said order that the employees would have also to be paid their salaries. The said order was not challenged in any proceedings and to that extent has attained finality. The present impugned order has been passed only in furtherance to the said directions given on 28.02.2013. It is clear that the impugned order has been passed in appropriate exercise of the powers under Section 403 of the Companies Act. Passing directions regarding the employees of the Company is an interim arrangement regarding management of the affairs of the Company. There are no questions or issues raised in this appeal which would warrant exercise of powers of this court under Section 10 F of the Companies Act 1956. Appeal dismissed.

Summary

Issues:
- Appeal filed under Section 10F of the Companies Act, 1956 to challenge an order passed in a Company Petition under sections 397/398/402 and 403 for alleged acts of oppression and mismanagement.
- Application seeking direction for disbursement of outstanding salary and future salary withholding.
- Dispute between family members.
- Interpretation of powers of the Tribunal under sections 397, 398, 402, and 403 of the Companies Act, 1956.
- CLB's authority to grant interim relief under Section 403.

Analysis:
1. The appeal was filed to challenge an order passed in a Company Petition under sections 397/398/402 and 403 of the Companies Act, 1956, alleging acts of oppression and mismanagement. The respondent had filed the petition, and an intervener sought direction for salary disbursement and future salary withholding.

2. The dispute involved family members of late Shri Ashok Nath, with the CLB concluding that the applicant was a regular employee entitled to outstanding salaries. The CLB directed the respondent company to release the salary of the applicant for specific months and not withhold future payments without permission.

3. The Tribunal's powers under sections 397 and 398 of the Companies Act, 1956, include regulating the company's affairs, share purchase arrangements, agreement terminations, and other equitable provisions. Section 403 allows the Tribunal to issue interim orders pending final decisions under sections 397 or 398.

4. The CLB's authority to grant interim relief under Section 403 was affirmed by a previous court decision, emphasizing that such powers are incidental to ensuring proper conduct of a company's affairs. The CLB can pass orders in the interest of the company as long as they are just and equitable.

5. The impugned order was deemed to be a valid exercise of powers under Section 403, as it pertained to an interim arrangement regarding the management of the company's affairs. The order was based on previous directions given by the CLB and did not raise any issues necessitating intervention under Section 10F of the Companies Act, 1956.

6. Consequently, the appeal was dismissed, affirming the CLB's authority to issue directions regarding employees and the management of the company. The impugned order was considered to be in line with the provisions of the Companies Act, and no grounds were found to warrant intervention under Section 10F.