9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (12) TMI 963 - HC - Companies LawCLB power to pass orders u/s 10 CPC - Held that - Whether the acts committed by respondent No.2 would be dealt with as the acts in pursuance to the MOU or qua oppression to cause prejudice to the petitioner and the Company. If the acts noticed were independent of the MOU executed, then the allegations would squarely fall within Sections 397 and 398 of the Companies Act, 1956. If not, then it would be mere breach of the MOU and would not be covered under Sections 397 and 398 of the Companies Act. Tribunal further held that if tomorrow this court were to uphold the validity of the MOU in the suit, then the appellant would obviously not be entitled to any reliefs sought now. Based on these aspects, the Tribunal held that the subject matter before this court in the suit and before the Tribunal was the same and the parties were the same. Hence, the Tribunal exercised its discretion and stayed further proceeding in the petition. It is clear from the nature of pleadings in the petition and in the suit that there is commonality of facts running through two matters. The crux of the issue is the MOU dated 09.11.2011 under which the parties have taken steps. If the MOU is upheld, the steps taken by respondent No. 2 would be in terms of the MOU. If for some reason the MOU is struck down then the issue about oppression and mismanagement would arise for consideration. The issue of legality and validity of the MOU dated 9.11.2011 is pending in the civil suit. The impugned order has rightly stayed the proceedings before the CLB under principles akin to section 10 of CPC. The view taken in the impugned order appears to be a plausible view. Accordingly, no reason to interfere in the present appeal
Issues Involved:
1. Applicability of Section 10 CPC to Company Law Board (CLB) proceedings. 2. Identity of subject matter and reliefs in the civil suit and company petition. 3. Allegations of fraud, forgery, and mismanagement. 4. Validity and enforceability of the Memorandum of Understanding (MOU) dated 09.11.2011. 5. Jurisdiction and inherent powers of the CLB under Regulation 44. Detailed Analysis: 1. Applicability of Section 10 CPC to Company Law Board (CLB) proceedings: The primary issue is whether Section 10 CPC, which prevents concurrent jurisdiction courts from trying parallel suits on the same matter, applies to CLB proceedings. The Supreme Court in *National Institute of Mental Health and Neuro Sciences vs. C. Parameshwara* held that Section 10 CPC is normally referable to suits in civil courts and does not apply to proceedings under other statutes. The Calcutta High Court in *Anup Agarwalla & Ors. vs. Castron Mining Ltd. & Ors.* and the Madras High Court in *M.S.D.Chandrasekar Raja vs. Jay Bharath Textiles (P) Ltd.* recognized that while Section 10 CPC does not directly apply to CLB, analogous principles can be invoked under the inherent powers of the CLB as per Regulation 44 of the CLB Regulations. 2. Identity of subject matter and reliefs in the civil suit and company petition: The Tribunal noted that the subject matter of the civil suit and the company petition were identical, centering around the MOU dated 09.11.2011. The appellant sought reliefs in the civil suit to declare the MOU rescinded and to prevent the respondent from creating third-party interests in specific properties. Similarly, the company petition sought injunctions against the respondent's actions concerning the company’s management and assets. The Tribunal concluded that the reliefs, though different in form, were based on the same underlying facts and issues. 3. Allegations of fraud, forgery, and mismanagement: The appellant alleged that the respondent forged her signatures on documents, siphoned funds from the company, and manipulated board resolutions. These allegations were central to both the civil suit and the company petition. The Tribunal had to determine whether these acts were part of the MOU's execution or independent acts of oppression and mismanagement under Sections 397 and 398 of the Companies Act. 4. Validity and enforceability of the MOU dated 09.11.2011: The MOU was crucial in both proceedings. The appellant claimed that the respondent did not fulfill the MOU's terms and committed fraud. The civil suit sought to rescind the MOU, while the company petition addressed the consequences of the respondent's actions under the MOU. The Tribunal held that the resolution of the MOU's validity in the civil suit would directly impact the company petition's outcome. 5. Jurisdiction and inherent powers of the CLB under Regulation 44: Regulation 44 of the CLB Regulations grants the CLB inherent powers to make necessary orders for justice and to prevent abuse of process. The Tribunal used this regulation to stay the company petition proceedings, aligning with the principle of avoiding conflicting judgments and ensuring judicial consistency. The Tribunal's decision was supported by precedents, including the Madras High Court's judgment in *M.S.D.Chandrasekar Raja vs. Jay Bharath Textiles (P) Ltd.*, which allowed the CLB to exercise powers akin to Section 10 CPC. Conclusion: The Tribunal's decision to stay the company petition proceedings under principles analogous to Section 10 CPC was upheld. The High Court found no reason to interfere with the Tribunal's plausible view, emphasizing the need to avoid conflicting judgments and ensure consistency in judicial decisions. The appeal was dismissed, affirming the Tribunal's exercise of its inherent powers under Regulation 44 of the CLB Regulations.
|
