9911796707
TMI Blog1986 (12) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... elected as director thereof being the sole representative of the NRI group and being in possession of the majority support of other local Indian shareholders in the form of their proxies, but defendant No. 1 in conspiracy with defendants Nos. 2 to 4 and two other directors objected to the renomination of plaintiff No. 1 as director, and defendant No. 1 with the support of his employees-directors and other bogus shareholders had forged proceedings of the meeting in the minutes book which has cast a cloud on the right of plaintiff No. 1 and other plaintiffs and on the status and title of plaintiff No. 1. The contention of learned counsel for the defendants in this application is that 24 out of 30 plaintiffs before this hon'ble Court had filed an application under sections 408 and 409 of the Companies Act before the Company Law Board and in para 23 of the said application, it was alleged that "renomination/re-election of plaintiff No. 1 as director was allegedly rejected" and in para 24 thereof it was alleged that "petitioner No. 1's name was proposed by Shri B. M. Gandhi and seconded by Shri Kamal Gandhi. At that stage, some bogus shareholders who had been brought there objected to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the financial institutions are actively associating themselves with conducting the affairs of the company and have suggested professionalisation of the board of directors, described in para 11 supra and appointment of concurrent auditors. These should adequately take care of proclivity, if any, towards mismanagement and we do not think that any further preventive action under section 408 of the Companies Act is warranted and regarding reliefs sought under section 409 of the Companies Act, the board had found that the same could not be granted as the Company Law Board under its delegated powers did not have the jurisdiction to determine the question of appointment of plaintiff No. 1 as director renominated in the meeting dated March 31, 1986, and it was observed in para 25 of the order that "in regard to maintainability of an application under section 409 of the Act, the condition precedent is that the application should be made by either a director, managing director or other persons holding certain positions as mentioned in section 409. Since Shri Arora did not hold any of these positions at the relevant time and it has also not been shown that any of his co-applicants held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be no dispute with the above principle. However, the Supreme Court had laid down certain conditions under which section 11 was attracted and the same are codified in Syed Mohd. Salie Labbai v. Mohd. Hani/a, AIR 1976 SC 1569, and it was held therein that : "Before a plea of res judicata can be given effect to, the following conditions must be proved (1) that the litigating parties must be the same; (2) that the subject-matter of the suit also must be identical; (3) that the matter must be finally decided between the parties, and (4) that the suit must be decided by a court of competent jurisdiction." It was further observed therein that "the best method to decide the question of res judicata is first to determine the case of the parties as put forward in their respective pleadings of their previous suits, and then to find out as to what had been decided by the judgments which operate as res judicata ". It is keeping in view these observations of the Supreme Court in these rulings that this application has to be disposed of. The defendant has filed a photostat copy of the order dated July 31, 1986 of the Company Law Board in the petitions moved by the plaintiffs a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epend. No doubt the parties in the applications under sections 408 and 409 of the Companies Act filed by the plaintiffs before the Company Law Board are the same but it would be difficult to say that the subject-matter of this suit is also identical with the subject-matter of the application filed before the Company Law Board. Section 408 of the Companies Act refers to "powers of Government to prevent oppression or mismanagement" and section 409 thereof provides for "power of Central Government to prevent change in board of directors likely to affect the company prejudicially". The present suit is for a declaration that plaintiff No. 1 was duly renominated and as such was director of defendant No. 7 in its annual general meeting held on March 31, 1986. By no stretch of imagination can it be said that the subject-matter of the suit is identical with that of the application filed under sections 408 and 409 of the Companies Act before the Company Law Board. A perusal of the photostat copy of order of the Company Law Board, relevant excerpts whereof have been quoted above, would further show that even in that application, the matter had not been finally decided. As regards the applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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