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TMI Blog2008 (4) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... by the actions of the appellants group. The Company Law Board, with a view to protecting status quo, pending the company petition, passed an interlocutory order on 18-8-2005, whereby directed the company, not to give effect to any resolution, which might be passed at the annual general body meeting of the company to be held on 24-8-2005, pertaining to the directorship of the first respondent, until further orders in the company petition. 4. It is also not in dispute that after several hearings and finally on account of the efforts of the Company Law Board and counsel for the parties, there was understanding between the parties to settle the disputes between them and an order was passed, recording such a compromise entered into between the parties on 8-9-2006. 5. According to the appellants, the order, dated 8-9-2006, was the final order in the company petition and all prior orders passed by the Company Law Board, that were interlocutory in nature came to be merged with the final order. 6. Mr. H. Karthik Seshadri, learned counsel appearing for the appellants submitted that once the final order is a compromise order, as envisaged between the parties, the said order cannot be modi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of regulation 44 viz., to prevent the abuse of process of the court could be invoked. In the instant case, that is not the case. Here parties had with open eyes entered into a compromise. There can be no case where the court would interfere with a compromise order, unless it is alleged that the order was obtained by fraud, misrepresentation or by coercion. No such allegation of that kind has been made. There cannot be an afterthought and modification. Reliance is made on Jayalakshmi Coelho v. Oswald Joseph Coelho AIR 2001 SC 1084. Merely because, it pertains to the power of the family court it does not in any way dilute the principles of section 152 of the Code of Civil Procedure, which principle is equally embodied in regulation 45 of the Company Law Board Regulations." 9. According to learned counsel appearing for the appellants, under section 10E(5) of the Companies Act, 1956, the Company Law Board shall in the exercise of its power and discharge of its functions under the Act or any other law be guided by the principles of natural justice, shall act in its discretion and as such, the powers of the Company Law Board are limited. 10. According to Mr. S. Parthasarathy, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipt of consideration from petitioner Nos. 1 and 6. 7.The petitioners are entitled to exercise their rights as shareholders of the company. Liberty to apply." 13. In C. A. No. 82 of 2007 in C. P. No. 9 of 2005, the Company Law Board has passed the impugned order. The operative portion of the impugned order reads as follows (page 625 of 142 Comp. Cas.): "In view of my foregoing conclusions and in exercise of the powers under regulation 44, it is hereby ordered as under : (a )The removal of the first applicant from the office of director of the company, at the annual general meeting held on 24-8-2005, is declared as invalid and the company shall file appropriate form in this behalf with the Registrar of Companies, Tamil Nadu, Chennai; (b )The respondents shall pay all the dividend declared, if any, and deliver gold coins to applicant Nos. 2 to 5 in terms of this order, in the event of any default on their part; (c )The respondents shall pay the dividend as declared, if any, to applicant Nos. 1 and 6 for the period between the year 2003 and March, 2005; (d )The company will re-issue proper receipts in the name of the firms/controlled by applicant Nos. 1 and 6 for having discha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt power to make such order as may be necessary for the ends of justice and to prevent the abuse of process of the Bench. 17. Regulation 44 of the Company Law Board Regulations, 1991 reads as follows : "44. Saving of inherent power of the Bench.-Nothing in these rules shall be deemed to limit or otherwise affect the inherent power of the Bench to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Bench." 18. It is not in dispute that regulation 44 of the Company Law Board Regulations, 1991, is more or less similar to that of the inherent powers available to any civil court, under section 151 of the Code of Civil Procedure. 19. Learned counsel appearing for the appellants contended that once the final order is a compromise order between the parties, the said order cannot be modified or altered by the court, regarding the compromise, except with the consent of all the parties to the said compromise. In support of his contention, he placed reliance on the decision, Manish Mohan Sharma's case (supra). 20. As per the ruling of the Hon'ble Apex Court in Manish Mohan Sharma's case (supra), the Company Law Board, when it deals with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng until further orders". 23. As per the impugned order, dated 28-11-2007, it has been brought to light that the consent order, dated 8-9-2006, had been passed, subject to the earlier order of the Board, dated 18-8-2005, however, it was ignored by the appellants by giving scope to modify the consent order. For passing the impugned order, the Company Law Board has also relied on the decisions Smt. Neelu Kohli v. Nikhil Rubber (P.) Ltd. [2007] 137 Comp. Cas. 374 (Delhi) and I.T.C. Ltd. v. George Joseph Fernandes AIR 1989 SC 839. The Company Law Board has relied on the decisions to pass the impugned order in favour of the applicants, who are the respondents herein, in order to protect the rights of the shareholders. 24. The reasons stated in the impugned order, dated 28-11-2007, by the Board is that the appellants herein, taking advantage of the consent order, dated 8-9-2006, ignoring the earlier order of the Board, dated 18-8-2005, successfully have excluded the first applicant (the first respondent herein) from the office of the director of the company, which is unjustified, as per the impugned order. It has further opined that by applying the same yardstick, the appellants herein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 402 of the Companies Act, as per the requisite jurisdiction, direct shareholder to sell his shares to the other, although no case for winding up of the company has been made out or no actual oppression on the part of the director has been proved. It has been further ruled by the Hon'ble Apex Court that in case where a case of oppression has been made out a ground for the purpose of invoking the jurisdiction of the Board in terms of sections 397 and 398 of the Act, a finding of fact to that effect would be necessary to be arrived at. But, the jurisdiction of the Company Law Board to pass any other or further order in the interest of the company, if it is of the opinion that the same would protect the interest of the company, the Board would not be powerless. The jurisdiction of the Company Law Board in that regard must be held to be existing, having regard to the aforementioned provisions. Similarly, the Company Law Board may not shut its doors on sheer technicality, even if it is found as of fact that unless the jurisdiction under section 402 of the Act is exercised, there will be a complete mismanagement in regard to the affairs of the company. Sections 397 and 398 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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